Over the last several years the value of the Maltese lira has fallen in relation to the U.S. dollar. In 1995 1 U.S. dollar equaled 0.3529 Maltese liri, but by 2000 1 dollar equaled 0.4086 Maltese liri. Malta's entry into the EU may ultimately mean that the nation will replace the lira with the euro, the common currency of the EU.
The Maltese Central Bank issues currency and sets interest rates. It also regulates monetary policy and controls the nation's financial reserves. There are 2 main commercial banks in Malta: HSBC Ltd. and the Bank of Valletta, each with 40 branches in Malta. Together, the 2 banks control 80 percent of the consumer banking market. There are also 2 smaller banks: Lombard Bank and APS Bank. Local merchant banks have a difficult time competing against foreign competition despite liberalized lending policies in recent years.