One of the supposed advantages of joining the European Union and the euro was that local banks could treat investments in Europe as “local investments”, thus freeing up a great deal of the funds local banks had stashed in their vaults and deposited at minimal rates of return with the Central Bank. Large amounts could thus be loaned out at profitable rates to boost profitability and dividends paid to shareholders.

If EU decision-makers agree to make a mandatory increase in commercial banks’ deposits with the national Central Bank and with the European Central Bank, this would limit the amount of funds available for trade and loans, thus cutting back on the profit-ability of the banks at a time of austerity when growth should be encouraged.

The Malta Association of Small Shareholders is concerned that EU decision-makers want to get deposits from the banks at a cheap rate to finance the excessive lending to inefficient operators.