Formulation and implementation of a macro-prudential policy
The Central Bank of Malta, as the macro-prudential authority, is responsible for the formulation and implementation of macro-prudential policy. In terms of article 17A(1) of the Central Bank of Malta Act, the Bank may issue, amend or revoke directives in connection with macro-prudential tools and policy. The main objective of this function is to reduce the build-up of risks in the financial sector and to halt significant spill over to the real economy, thus mitigating systemic risk.
In terms of article 17B of the Central Bank of Malta Act, the Joint Financial Stability Board has been set up to facilitate cooperation between the Bank and the Malta Financial Services Authority in the formulation and implementation of macro-prudential policy. In fulfilling this function the Bank also cooperates with the European Systemic Risk Board, with the European Central Bank and with other national or international micro/macro-prudential authorities as required.