Michael C Bonello: Pursuing faster growth in a stable macroeconomic environment Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Annual Dinner of the Institute of Financial Services, St. Julians, 10 November 2005. *  *  *  Prime Minister, Parliamentary Secretary, Excellencies, Ladies & Gentlemen, I should first of all like to thank the President and Council of the Institute of Financial Services for inviting me once again to their annual dinner. Over the past six years I have been able to observe with satisfaction how the Institute has successfully adapted itself to the steady expansion of Malta’s financial services industry, and to the demand this growth has generated for a diversified range of professional expertise. One planned innovation which I consider most appropriate is the Certificate in Mortgage Advice and Practice that is partly based on Maltese law. This annual occasion also affords me a welcome opportunity to share with a distinguished audience of bankers and their corporate guests the Bank’s thinking on a subject of topical interest. In today’s complex global environment several issues spontaneously present themselves as likely candidates for further analysis. For us in Malta, the major policy challenge at this time is to return the economy to a path of higher and sustained growth. The facts speak for themselves.
Moreover, central banks are not usually alone in fulfilling this mandate. In many countries central banks are in close cooperation with independent regulatory agencies. These agencies have the authority of regulation, supervision and oversight of financial markets and institutions. In the context of Turkish financial system, we have two such agencies: Banking Regulation and Supervision Agency and Capital Markets Board. At this point, I should emphasize that price stability and financial stability objectives are complementary in nature. Disruptions in financial markets would eventually affect the real economy through their impact on interest rates, exchange rates or asset prices. Thus, it is not far fetched to regard them as two sides of the same coin. Dear Guests, Financial stability lies at the core of a well-developed financial system. And the smooth operation of payment and settlement systems is a prerequisite for financial stability. The Bank for International Settlements defines the oversight of payment and settlement systems as a task left primarily to central banks with the objective of promoting the smooth functioning of payment systems and protecting the financial system from the possible “domino effects” which may occur when one or more participants in the payment system experience credit or liquidity problems. Central Bank of Turkey has played a leadership role in the development of payment and settlement services in Turkey. Today, the payment system is fully complied with the provisions of the CPSS (Committee on Payment and Settlement Systems) Core Principles for Systemically Important Payments Systems.