Malta - Banking and securities

In June 1968, activities of the Currency Board were transferred to the new Central Bank of Malta. The Central Bank is responsible for the regulation of the banking system, the money supply, the issue of currency, and the administration of exchange control. The Central Bank manages the official external reserves and advises the Minister of Finance regarding the exchange rate of the Maltese lira. The Maltese lira is calculated on the basis of a currency basket, which currently consists of the ECU, pound sterling, and US dollar. Foreign reserves, excluding gold, totaled $1,605 million at the end of 1995. There are four commercial banks-the Bank of Valletta, HSBC Bank Malta, Lombard Bank Malta, and APS Bank-as well as the National Savings Bank.

In November 1995, Midland Bank (UK) became the first foreign bank to be granted a license to operate in the domestic market. In 1999, Hong Kong and Shanghai Banking Corporation (HSBC) acquired 67.1% of the shares of Mid-Med. The bank was subsequently renamed HSBC Bank Malta and became the largest bank operating on the island. Six international banking institutions are established in Malta: Turkiye Garanti Bankas, First Austrian Bank Malta, First International Merchant Bank, Izola Bank, Bank of Valletta International, and HSBC Bank Malta. Total assets/liabilities of the deposit-money banks stood at LM 1.88 billion in 1995, while the assets/liabilities of domestic and international banking institutions amounted to LM 155 million and LM 407.7 million, respectively.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.4 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $6.1 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 4.25%.

Turnover at the Malta Stock Exchange dropped sharply to LM 75.8 million ($70 million) in 2002, a fall of LM 93.7 million compared with levels in 2001. Total market capitalization in 2002 was LM 1.6 billion. In 1994 the Malta International Business Authority became the Malta Financial Services Center (MFSC), responsible for the regulation and registration of financial services provided in and from Malta.