financial services sector that takes into account a national risk appetite. one must take stock of the risk / benefit quotient of each subsector, and the lessons learnt thus far, and put it in a long - term context on where to focus going forward. during the year, at the request of the maltese government, malta underwent an imf financial sector assessment programme, which is an in - depth assessment of the financial sector. furthermore, a comprehensive update of the 2015 national risk assessment ( nra ) was carried out in 2017 and published earlier this year. it identified potential money laundering and terrorism financing threats and vulnerabilities that present risks to malta's economic and societal stability. the nra forms the basis of malta ’ s national aml / cft strategy. in fact, some of the initiatives identified in the nra are already being implemented. in addition, a committee of experts on the evaluation of anti - money laundering measures and the financing of terrorism ( monevyal ) has just ended a rigorous on - site mission to assess malta ’ s standing with international aml / cft standards. the local authorities are eagerly expecting the final results of these evaluations as they represent a standardised global yardstick against which to benchmark our state of play. this will leave a wealth of information for authorities to exploit as they direct efforts into strengthening further the current institutional framework and operations. all stakeholders are encouraged to seize the opportunity to improve the reputation, soundness and resilience of our financial services sector. malta is also actively working to embrace blockchain technologies, including virtual assets. 2018 will also be remembered as the year when malta was propelled to the fore with the introduction of a holistic legislative and regulatory framework for fintech and virtual assets, asserting itself as a digital hub. such technologies provide the benefits of reducing transaction costs which can be passed on to consumers ; greater efficiency, transparency, advancement in kyc capabilities and competition. while these benefits are acknowledged and duly welcomed, one must also be sensitive to the underlying potential risks they might pose as they become more main - stream. the effective implementation of the new legislation and regulation requires expertise not only in the underlying technology, but also in its legal aspects and all the risks involved, such as cyber risks. the fast technological advancements are also a challenge and staying ahead of the game from a page | 9 regulatory perspective should be given high importance for the successful development in this new field. thus, while all the legislative initiatives

, at 87 % of gdp in 2006, and of gross fixed capital formation, which was barely 20 % of gdp last year, are appropriate. this imbalance is reflected in the persistent, if reduced, current account deficit, which suggests that consumption levels are indeed too high. mr. president, the members of the financial community, and the credit institutions in particular through their lending policies, can play a useful role in seeking to correct this bias towards consumption, which occurs at the expense of improving the economy ’ s long - term growth potential and, therefore, weakens its ability to narrow the income gap with the more advanced members of the euro area. in this regard, we should be aware that despite the recent economic recovery, malta ’ s per capita gdp measured in purchasing power standards is still just below 70 % of the euro area average. lessons from euro area country experiences policy prescriptions for bridging the remaining income gap are readily available. in this regard, the recent, widely different experiences of ireland and portugal are highly instructive. 1 thus, whereas real per capita income in these two countries was not very different in the early 1990s, it had roughly doubled in ireland by 2006 to 131 % of the euro area average, but had only improved slightly in portugal to 68 %. how can such divergent performances be explained? before joining the euro area portugal pursued a pro - cyclical fiscal policy, which reinforced domestic demand, while in ireland the fiscal stance was more disciplined. whereas unit labour costs and inflation rose fast in portugal, cost and price pressures were more contained in ireland. as a result, competitiveness declined in portugal, reflected in a growing current account deficit, whereas ireland remained competitive and enjoyed a roughly balanced current account. these different policy approaches left their mark in the post - euro period. in ireland, real output growth in the years 1999 - 2006 continued at a strong pace, 6. 5 % per year on average, and the fiscal balance was in slight surplus. in contrast, portugal experienced an average growth rate of 1. 7 %, continued weak competitiveness and a substantial current account deficit. a major factor behind ireland ’ s success was a 3 % average annual increase in labour productivity growth, compared to less than 1 % in portugal. another lesson that has emerged from the experience of these two countries, and is also widely documented in the literature, is that cost levels are not the only determinant of competitiveness. constantly upgrading human and physical capital and freeing markets are