With regard to the situation in Malta, it bears recalling that a Financial Stability Office was created in our central bank as long ago as 2000 when the Bank was still responsible for banking supervision. The decision to add a macro-prudential dimension to our micro-prudential work was motivated by a realization that potential systemic risks were not being adequately monitored. Our work in this field was given a boost in 2002 when Malta became one of the first countries to undergo an IMF/World Bank Financial Sector Assessment Programme (FSAP). Though the Bank had already built up a small stress testing capacity and had undertaken assessments from a macro-prudential perspective, the FSAP proved a very valuable learning experience and gave our work a new sense of purpose and direction. Since then the Bank has endeavoured to build up expertise in this important field by following closely developments abroad and through exchanges with other national central banks and the ECB. We are even now in the process of restructuring our internal set-up and human  BIS central bankers’ speeches  1  resources to take into account lessons learned during the financial crisis and to be able to participate actively in the newly-established European Systemic Risk Board and its substructures. The financial stability function will be composed of two separate offices, one dealing with surveillance and the assessment of systemic risk, the other focusing more on policy, stress testing and crisis management.
Against this background, the step we are taking today, which is designed to intensify the exchange of views between the authorities and the financial services industry and to deepen the examination of common concerns, assumes even greater importance. Participation in the work of the Forum for Financial Stability should, therefore, prove to be of mutual benefit. From the point of view of the Central Bank of Malta, it should also enable us to refine our analytical work, whose conclusions have since 2009 been published in our annual Financial Stability Report and the mid-year Update. The Report contains insights into the main vulnerabilities of the domestic financial system and into any latent risks, whether in the system itself or in the external environment. It also assesses the robustness of the financial  2  BIS central bankers’ speeches  system and its resilience to particular stress events. By publishing its findings, the Bank aims to foster a constructive dialogue among all stakeholders with the ultimate objective of strengthening the financial system. The quality of the Bank’s assessments, however, depends on access to timely and reliable market intelligence. For, while the statutory data submitted regularly by reporting institutions is thoroughly analysed, this is insufficient to provide a holistic assessment of emerging risks. Financial stability is a forward looking concept. Risks, moreover, may materialise suddenly or with little warning. This is where market intelligence plays an important role.