EU 'In Depth' Review Of Malta's Financial Stability

The European Commission published its In-depth review for Malta in terms of the 2011 regulation on the prevention and correction of macroeconomic imbalances. The report essentially analyses Malta's financial stability taking into account, amongst others, the positioning and performance of Maltese banks (Section 3 - In-depth Analysis of Financial Sector Vulnerability). The report finds that Malta is experiencing macroeconomic imbalances, which deserve monitoring and policy action. In particular, the high corporate and government debt levels warrant attention to ensure the long-term sustainability of the public finances. Moreover the very large financial sector, and then, in particular, the strong link between the domestically-oriented banks and the housing market and construction sector, which are in the process of adjusting, pose challenges and deserves continued monitoring.