Malta Minister Calls for Balanced Innovation in Financial ServicesMEDIA ROOM
In the face of rapid regulatory changes, Malta’s financial services industry had little option but to seek a path of balanced innovation, according to Finance Minister Edward Scicluna.
“Hard as it may get, there is really no alternative. We can neither freeze up in fear of the unknown nor take the fast track business-as-usual approach to potential disaster,” Prof. Scicluna said at a biennial financial services conference which focused on the future of financial services in Malta.
The minister observed that despite the increased regulation which followed the 2008 financial crises, financial services professionals surveyed by the Financial Times overwhelmingly argued that not enough had been done to prevent a future market crash, although he stressed that this did not mean that the industry wanted more regulation.
The same survey also showed that just 12% said that they fully understood how the crisis was allowed to happen, and as a result, Prof. Scicluna said, it was no surprise that the effectiveness of recent regulation was being doubted.
But the minister stressed that new legislation also offered new opportunities, and said that one must ensure that innovation goes through much more rigorous testing in the future.
Central Bank governor Josef Bonnici similarly emphasised the need for continued innovation, stating that Malta needed to adopt a strategy to remain at the forefront of change, including by remaining competitive and adapting to evolving consumers’ expectations.
On a long-term basis, he said, the possibility of developing Malta as a regional catalyst – and specifically, on capitalising on developments in North Africa – should be looked into. He pointed out how Luxembourg, for instance, has been very successful in the field of Islamic financing – which overcomes religious prohibitions on charging interest or fees on loans – and that Malta should follow suit.
In his address, Malta Financial Services Authority chairman Joe Bannister emphasised the need for political consensus and cooperation between government, regulators and the industry.
He also noted that while other major financial services jurisdictions faced similar issues to those faced by Malta, they presented a united front, and warned that Malta had to be careful not to generate its own bad PR. At a later point, he pointed out that certain operator attracted negative attention by “abusively” advertising Malta as a tax haven.
Both Prof. Bonnici and Prof. Bannister warned of the need to ensure that salaries are reasonable, with the former stressing that only higher productivity and increased competitiveness allowed for wages and living standards to go up sustainably. Prof. Bannister, on the other hand, noted that there was a growing tendency to demand very high salaries, and said that he was “a little scared” at finding out that at certain levels, pay packages were approaching those at the City of London.