Upgrading the present capital adequacy regime for credit institutions in Malta : an evaluation

Abstract

1994 will long be remembered in Malta's banking regulatory history as the year when the local financial sector graduated from being one hitherto regulated by run-of-the-mill legislation to one based on international standards such as European Council Directives and/ or the Basle Capital Accord of July 1988. The primary scope, or macro-objective, of this framework was a very commendable one - the establishment of Malta as an international financial services centre. However, it is obvious that this goal would not or could not be achieved by a mere statement to this effect. In fact, one of the main considerations underlying the establishment of a local international financial services centre was that most of the new legislation would be based on, or adopt standards laid down in European Union directives and (specifically in the case of banking regulation) also partly on the 1988 Capital Accord. It is precisely this fact which lends credibility to the legislative framework set up in place in 1994.