11 December 2013

Achieving Malta’s potential growth in challenging times

Speech given by Central Bank Governor Prof. Josef Bonnici at the annual ifs dinner
The ECB has played an important role in averting risks
Malta Independent 05/12/2013: As you will all be aware, many of the member states of the euro area are going through fundamental reforms that would over time promote sustainable growth. This can occur only with the support of a healthy financial sector, including a banking system that provides the needed volume of credit at interest rates that reflect the European Central Bank’s provision of ample and low-cost liquidity.

Over the course of the crisis the ECB has launched various measures to avert the risk of more severe ramifications of the financial crisis. In July, the ECB introduced forward guidance, assuring the financial markets that its policy stance will remain accommodative and interest rates low for as long as necessary. As a matter of fact, the recent cut was consistent with this forward guidance.

Throughout the crisis, the ECB has played an important role in ensuring, within its price stability mandate, the proper financing of the euro area economy in a context of subdued credit dynamics. A series of measures were introduced to ensure that banks can pass on low policy rates to the real economy, in particular where they are needed the most. These measures include providing ample liquidity to euro area banks, reviewing...read on.