. our operational resilience expectations help in this regard. but we also want to see firms working together on market disciplines towards operational resilience in the financial sector. a good example is critical thirdparty providers, a subject on which hmt published a policy statement. [ 3 ] in the new world, relationships with critical third - party suppliers are becoming as important as the relationships with large financial counterparties that international banks had established over many years. that is a sign of the rising prominence of operational vs. financial matters in that new world – less of an afterthought. so your ceos may need to start making different types of phone calls. the financial sector can also work together on the development of extreme and multidimensional systemic stress scenarios, and assessing the impact of shocks from one firm to another. we are arguably now still in the foothills of this new digital era. ahead of that, international banks must frontload the implementation of operational resilience policy. surely a mere sliver of the earnings of the last decade should be more than enough to cover that investment. and boards must make sure they understand the risks from new technology and that operational resilience becomes part of the fabric of their decision making. this means, before entering materially into crypto assets, adopting artificial intelligence ( ai ), introducing the cloud ; or entering third - party relationships, international banks active in the uk must complete their operational resilience homework. so that they are prepared for this new tide. towards waters in which safe havens will probably be quite sought after and attractive – so there is an opportunity here for banks and their franchise. climate the two issues i have discussed so far, namely how the new world might threaten firms ’ financial and operational resilience, obviously have the potential to crystallise in the very near future. the last issue i will touch on today may appear to some as somewhat longer - term, but it is fast approaching and will change the environment we operate in. that is climate change. over the last couple of years markets have exhibited a number of features which arguably give us a foretaste of some of the future consequences of climate change, depending on how the climate transition pans out. here, i am thinking of the disruption to world energy and commodities markets, global supply chain problems and, most recently, the threat of food insecurity. it would be easy to attribute each of these issues to specific triggers, such as covid or

michael c bonello : central bankers ’ view of the new challenges speech by mr michael c bonello, governor of the central bank of malta, at a conference entitled “ the challenges for central banks in an enlarged emu ” organised jointly by the european community studies association ( ecsa austria ), research institute for european affairs ( ief ) and oesterreichische nationalbank, vienna, 20 - 21 february 2004. mr bonello was a panelist on the discussion regarding “ central bankers ’ view of the new challenges ”. * * * when ten countries, including malta, join the european union ( eu ) on 1st may, they will assume the status of “ member states with a derogation ”, meaning that they are exempt from the stricter rules of emu. this may seem to imply that the transition to emu is thereby rendered easier, but a careful examination of the conditions attached to the process reveals that the policy issues involved are anything but straightforward. this is particularly true of a small open economy like malta ’ s in which macroeconomic policy is strongly conditioned by the external environment, but which has nevertheless succeeding in reconciling a hard currency peg with relative exchange rate stability for over thirty years. malta has a population of only 400, 000. its nominal gdp of €4. 5 billion, or less than 0. 1 % of that of the eu, translates into a per capita income which is around 69 % of the eu average. market services, including tourism and finance, account for nearly two - fifths of gdp, while manufacturing contributes almost a quarter. given its size and lack of natural resources, it is not surprising that malta has one of the most open economies in the world, with imports and exports each almost as large as the gdp. the eu is malta ’ s main trading partner, accounting for over two - fifths of exports and two - thirds of imports in 2003. it is an even more important market for the tourism industry and is a major source of capital investment. for malta, therefore, the prospect of being anchored in the relative safety of the world ’ s second largest economy and of using that economy ’ s currency represents a considerable advantage. perhaps the foremost benefit of euro area membership is being able to share in the credibility of a europe - wide monetary policy. this will not only mean reduced exchange risks and less uncertainty for economic operators, but also the elimination of the risk premium on the maltese lira. the resulting reduction in interest rates