Most importantly, it has achieved a high degree of sustainable convergence with the euro area and is about to adopt the euro, a feat many believed unachievable in such a short time span. Here I would like to express my gratitude to the entire banking community, including the staff of the Central Bank of Malta, for their hard work and commitment in preparing for a smooth currency changeover. How did this marked change in fortunes come about? Three factors at least played a role. Like other small countries which leveraged their participation in regional economic groupings to overcome size and resource limitations, Malta has adapted its institutions and policies to the requirements of EU membership and is starting to derive the expected benefits. At the same time, under the pressure of globalization, polices have been implemented to start correcting endemic weaknesses. And finally, advantage has been taken of the cyclical upturn  BIS Review 143/2007  1  in external demand. As a result, the economy has grown by more than 3% in each year since 2005. Recent measures have included the restructuring of the public and public-enterprise sectors, a wide-ranging privatization programme, the first stage of a pension reform, and the complete liberalisation of the trade and capital accounts. As a result, the public sector’s profile in both product and resource markets has been reduced, and the price mechanism now plays a more prominent role in the allocation of resources. Perhaps the most striking change has occurred in the fiscal situation.
These have now been delivered to help ensure that the Bank is prepared for emerging and future technologies, participants, and relationships across the payments value chain. Firstly, our regulatory perimeter has recently been expanded to allow us to supervise critical service providers to recognised payment systems and we have started supervision of our first service provider, VocaLink, who provides critical services to the Bacs, Faster Payments and LINK systems. It is important to be clear here that this change does not, in any way, replace the role of the scheme operators in managing their risks. Indeed we do not expect scheme operators to change how they work as a result. Instead, we see this supervision as a complementary corner stone supporting financial stability. We published our supervisory approach to service providers in February, setting out how we will use 5  international principles that are specifically tailored for this type of firm. Secondly, we worked with HM Treasury to further widen our regulatory perimeter to include non-interbank payment systems through the Digital Economy Act 2017. We are now in a position where a non-bank payment system, for example a ‘FinTech’ payment system whose users are not banks, can be brought under the Bank’s supervision, should one become systemically important to the UK financial system. 6  On both of these changes, the Bank has worked extensively with the other UK authorities to make sure our regime is future-proof and well-equipped to keep pace with and respond quickly to a payments landscape that continues to change shape.