In terms of article 17 of the Central Bank of Malta Act, the Central Bank of Malta is also responsible to provide financial support through its ‘lender of last resort’ (LOLR) function to safeguard the stability of the banking sector. This function is normally resorted to in exceptional circumstances when there is a perceived threat to the stability of the financial system.

The development of a crisis can disrupt the intermediation function of the financial system and impede banks from managing their risks efficiently. The monitoring and assessment of risks that could lead to vulnerabilities however enables the authorities to take timely measures to prevent or reduce the impact of such risks on the financial system. Clear communication strategies and allocation of responsibilities between the authorities concerned become essential. In its role as lender of last resort as well as in its responsibilities for financial stability, the Central Bank of Malta acknowledges its key role in the management of potential financial crises situations and therefore it continuously develops its operational capabilities in this regard for the timely management and resolution of financial crisis situations.