In this regard it is reassuring that the recently concluded IMF/World Bank FSAP exercise found Malta’s financial system to be healthy and well supervised, with a comprehensive legal framework and strong adherence to most international standards and codes. An issue of special significance for central bankers is the need to preserve the integrity of their institutions. Although the experience of current euro area Member States already provides useful insights into the appropriate exchange rate strategies to be pursued prior to, and during ERM II, the acceding countries will have to arrive at this judgment on the basis of expectations of the future path of the economy. Expectations, however, are just that. This means having to stand ready to give satisfactory accounts of the rationale for the policy choices made, to explain deviations from targets and to ensure that governments introduce corrective measures without undue delay. Unfortunately, however, the information reaching economic operators, and financial markets in particular, is not always accurate. And yet, with only a few months to go to EU accession, the markets will be looking out for indications regarding the strategies we intend to pursue with respect to ERM II and entry in the euro area. It will be important, therefore, to be constantly on guard against any imprecise information which could provoke untoward market reactions. This highlights the importance of an effective communications strategy and of appropriate coordination between central banks and governments. In Malta the joint working committee established to elaborate the strategy for adopting the euro fulfils this role.

The development of systems capable of delivering the quality-assured statistics necessary for the successful participation in EMU has understandably been a priority of the reform process. But the challenge of EMU extends beyond the Bank’s operational framework. For example, while we aim to participate effectively in the operational structures and decision-making bodies of the ESCB alongside much larger central banks, we only have some 250 people to perform the tasks involved. We are, therefore, undertaking a critical analysis of each of the Bank’s areas of operation in order to devise ways of coping with the increased workload. The development of new skills in work areas that will become key to the Bank’s operations as a member of the ESCB is another objective. The Bank’s management structure, too, is being reviewed. The policy-making process has been reinforced in order to respond to the growing need to analyse issues and take decisions in a more timely fashion. Line management has been strengthened and authority delegated more extensively to allow the managerial and technical staff to dedicate more time to ESCB-related activities. It has additionally been felt necessary to introduce a more efficient and rapid exchange of information across the Bank, particularly information acquired through participation in ESCB committees and working groups. While it is helping the Bank to become a more focused and efficient institution, effective participation in the ESCB undoubtedly represents a heavy claim on its limited human and financial resources.