Financial Stability

Macroprudential analysis and oversight

The Central Bank of Malta undertakes macro-prudential oversight of the financial system to evaluate the health, soundness and vulnerabilities in the domestic financial system. This is carried out through the analysis and monitoring of developments in macro-prudential indicators and other financial data, complemented by stress tests and scenario analysis. Market intelligence is also conducted through a number of surveys, which provide essential input to the analysis. The latter, also in the context of international developments, helps detect any vulnerabilities in the structure and functions of the domestic financial system, as well as in the identification of those international events, which could lead to instability in the domestic system. This process could trigger policy recommendations designed to safeguard the stability of the financial system, thereby ensuring a sustainable contribution of the financial sector to economic growth.

Stress Testing

Macro-prudential analysis is supported through stress tests, which assess the resilience of the financial system to extreme, yet plausible, shocks to the macro-economy and to financial markets.  The Bank makes use of risk models and carries out top-down stress tests mainly focused on domestically-oriented institutions in order to quantify potential losses that could arise from the materialisation of a number of risk events. Results of a number of tests are published on an aggregated basis in the Financial Stability Report and its Update. The Bank also participates in EU-wide stress testing exercises, which are implemented by the European Banking Authority in coordination with national supervisory authorities, the European Systematic Risk Board, the European Central Bank and the European Commission.

2022 Climate Risk Stress Test

2021 EU-Wide Stress Test

2020 SSM Vulnerability Assessment

2020 EU-Wide Stress Test (Postponed to 2021)

2019 SSM Sensitivity Analysis of Liquidity Risk

2018 EU-Wide Stress Test

2017 EU-Wide IRRBB Sensitivity Analysis

2016 EU-Wide Stress Test

2015 Comprehensive Assessment

2014 Comprehensive Assessment

EBA 2011 EU-wide stress testing exercise

CEBS 2010 EU-wide stress testing exercise

Cooperation on the oversight of payment and securities settlement systems

The Central Bank of Malta and the MFSA are signatories to a Memorandum of Understanding concerning cooperation and exchange of information in relation to financial services. Since payment and securities settlement systems must also function smoothly for financial stability to be sustained, the Bank, which is locally responsible for the oversight of these systems, and the MFSA have signed a separate Memorandum of Understanding to ensure cooperation in this sector.