An important area in which central banks will have obligations towards the ECB is that of statistics. This is because the formulation of monetary policy in the euro area rests on the timely availability of standardised economic, monetary and financial data from participating national central banks. In recognition of this future obligation, the Central Bank of Malta established a Technical Committee on Financial Statistics in 2000 to identify the changes required to the way statistics are classified and reported by the Central Bank and other financial sector reporting agents in order to comply with ECB and Eurostat requirements. This committee, which includes representatives of all the interested institutions, has already agreed on the necessary changes to the reporting forms through which credit and financial institutions submit data to the Central Bank and the Malta Financial Services Authority. Monetary and financial data are in fact already being reported to the ECB and Eurostat. In the meantime, significant progress has also been made with respect to the establishment of a common direct reporting database between the Central Bank and the National Statistics Office for the dissemination to the ECB and Eurostat of balance of payments data and data relating to Malta’s investment position. In the area of payments, a new settlement system has been established for the handling of large inter-bank payments in line with EU and other international standards.
Prospective members of the euro area are in fact also required to satisfy the other four Maastricht criteria, which relate to inflation, the interest rate, the fiscal deficit and the public debt. I propose to focus on the ERM II criterion for two reasons. First, the timing of EMU membership is conditioned by the two-year period embedded in the exchange rate criterion. In Malta’s case, if it is part of the next enlargement in May 2004 and even if it fulfils the other Maastricht criteria, the earliest that it will be technically able to participate in EMU is mid-2006. Earlier adherence to the other criteria, therefore, becomes almost irrelevant. Second, the obligation to participate in ERM II has implications in terms of the preparations which a national central bank has to make in view of its eventual entry into EMU. This is because it impinges directly on some of the central bank’s main functions – such as the formulation of monetary and exchange rate policy and the management of external reserves – something which is not true, for example, of the fiscal criteria. ERM II is thus of particular interest to central bankers. Against this background, I will now review some issues which eventual participation in ERM II, and later in EMU, raises for policy makers in Malta. No significant change in the parameters governing monetary and exchange rate policy EMU entails the adoption of the euro and the surrender of autonomy in the area of monetary policy to the European Central Bank (ECB).