MFSA to assist Maltese financial
services industry to benefit from EU membership
Malta Financial Services Authority will be taking a proactive approach
to assist the Maltese financial services industry in the coming months.
In what must look like a spark of optimism in the current sea of economic
gloom, MFSA Chairman Joe Bannister has outlined how EU membership will
"bring important additional benefits to Maltas economy and
business." MFSAs vision is to see the development of Maltas
financial services as one of the main pillars of the economy, along
with tourism and manufacturing.
Over the coming months the MFSA will be setting in motion its Agenda
for Maltese Financial Services in Europe.
The Agenda was developed in September of 2003, but has
gone through some fine-tuning following discussions with stakeholders
and was launched yesterday.
Making a point of how Ireland has benefited from membership, the MFSA
is hoping Malta will follow suit. The incredible success story has come
with some sacrifice, but the Irish economy now enjoys "a new generation
of fast-growing export-driven Irish owned firms in industries such as
agri-business, electronics, construction materials and paper."
While the MFSA points out that predictions about the present EU members
suggest that these: "would gain a total of 10 billion euros over
the long run, increasing their GDP by a one-time gain of 0.2 percent
which could lead to the creation of an estimated 300,000 jobs,"
the predictions for accession countries is even more positive.
The MFSA quotes recent economic literature which states: "trade-induced
simulations typically show that the (EU) applicants as a group gain
anywhere from 1.5 percent to 8 percent or even 10 percent of GDP in
the short to medium time."
The MFSA is confident that some of that gain will rub off on Malta,
but there is a clear warning: "the costs associated with increased
competition and adjustment may come sooner that the benefits in the
early years of membership."
Nevertheless, the MFSA expects the long-term benefits can be very large,
"if appropriate policies are followed."
According to MFSAs Agenda, Maltas integration into the EUs
financial markets will bring significant benefits to businesses, investors
and consumers. An integrated financial sector will: "lower costs
of capital; increase the global competitiveness of companies; help develop
SMEs; drive down the cost of financial services for consumers;
bring about an improvement in pensions; ensure higher returns for individual
investors and provide more venture capital for innovation."
It is the MFSAs intention to develop capabilities to assist the
financial services industry, to "obtain access to EU resources
such as project funding, networking opportunities, training and mobility
programmes, innovation centres and information relay centres."
"The MFSA will also develop capabilities to assist start-ups and
SMEs overcome bureaucracy and red tape, propose changes to administrative
policies and deal with government authorities and EU structures and
institutions on behalf of the industry."
The MFSAs Agenda outlines the challenges and opportunities facing
the Maltese Financial Services Industry of EU accession. The challenges
are to bring about: "a change in market reality that will require
a change in mindset to deal with the vastness of the single market,"
and Maltas difficult to catch up with the currents of regulatory
change that are driving the integration of the European market in financial
The MFSA sees opportunities through access to the European financial
services market through the single passport.
"This means that a particular product licensed in the home member
state would be automatically recognised in all other member states and
may be sold across borders free of undue bureaucratic controls."
The Agenda also recognises that with the emergence of Information Communication
Technology, new methods are being developed for the supply of financial
services products with the consequence that location is becoming less
The launch of the Agenda, was also addressed by Finance and Economic
Services Minister John Dalli, who said that the targets set out for
the MFSA in 1994, including the attraction of financial services industry
to Malta were being reached. Dalli emphasised the need for branding
Malta as a centre for financial services.
In the second half of the launch Prof Bannister explained the structure,
functions, and operations of the MFSA, and in a short discussion with
the press the Parmalat and Priceclub cases were brought up.
Prof Bannister explained that the MFSA, while fully responsible for
the regulation and monitoring of licensed entities such as banks and
the stock exchange, was not responsible for the monitoring and regulation
of the thousands of limited liability companies in Malta, which fall
under the Companies Act.