to adopt a number of necessary risk oversight practices that would ultimately benefit the banks and their stakeholders. what needs to be stressed is that reputation is a key asset of malta ’ s financial system which cannot be taken for granted. efforts to safeguard financial sector reputation need to be ongoing and undertaken by all concerned in the financial sector. reforms in the banking system need to be accompanied by structural reforms in other parts of the economy. however, this can only be possible if the economy is growing sustainably. within the context of limited fiscal space, there is a need for the appropriate environment to encourage investment and stimulate growth in the private sector. going forward, we need to enhance malta ’ s competitive position in order to attract a higher volume of capital investment in the future. a strong education and skills base, an upgraded infrastructure and a clean and sustainable source of energy are essential elements that would pave the way for future investment. the financial sector provides an important contribution to output and employment growth in malta. going forward, the sector also has room for expansion in a range of activities that link it with the domestic economy in the sense that value is added in malta by engaging the services of financial experts, lawyers, accountants and so on, but catering to demand abroad, such as in the mediterranean region and beyond. for example, the recently announced initiative to create space for a new commercial activity in the form of facilities for islamic banking is consistent with this vision for malta. enhancing our competiveness requires a constant search for new areas of activity as well as strengthening and refining the currently successful ones. it is the only way that we can ensure that the standard of living can keep increasing and that the value added of the maltese economy can keep advancing. thank you. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

josef bonnici : enhancing competitiveness address by professor josef bonnici, governor of the central bank of malta, at the ifs malta annual dinner of the institute of financial services, saint julian ’ s, 15 december 2014. * * * accompanying charts can be found at the end of the speech. hon. minister, members of the institute, distinguished guests, i would like to thank the president and committee of ifs - malta for once again organising this annual dinner and giving me the opportunity to share my thoughts with such a distinguished audience. i would like to take this opportunity to welcome ms pelin berkmen, head of an imf delegation, and members of her team, who are with us tonight and who have just concluded the annual article iv mission. a warm welcome also to mr antonio bassanetti, from the imf ’ s executive director ’ s office. i trust you will find this evening of relevance. mr president, i was pleased to hear about the achievements of the institute over the past year. education and training are fundamental components of a successful and sustainable financial services sector. the endeavours of the institute deserve due recognition. well done to all of you and i wish every success for the future. introduction the aftermath of the crisis provides an important starting point for the discussion of competitiveness, which will be the main theme of my remarks tonight. i will commence by focussing on chart 1, which compares the performance of various economies since the onset of the crisis. all the curves start from a common point of 100 in 2008. setting the maltese economy aside for a moment, several considerations stand out. the real gdp of the euro area has yet to return fully to its 2008 level, and the same can be said about the united kingdom. in fact, the euro area economy is currently 1. 9 % smaller than in 2008, while the british economy is 0. 5 % smaller. the euro area average is composed of countries recovering at different speeds. for example, germany is a top performer in the euro area, though its economy has lagged somewhat behind the united states. in fact, german output is currently 4. 8 % higher than in 2008, while in the u. s. it is 6. 5 % higher. where does malta fit in all this? as the chart shows, malta compared favourably throughout the crisis and the aftermath. the contraction at the trough in 2009 was relatively moderate. the path taken in the recovery has been stronger – in fact consistently stronger