Traditional writers of Maltese economic history (how many of them do we really have?) have regularly trooped out the mantra that whenever worry and strife were present elsewhere in the Mediterranean, Malta’s economy would always be doing well. The time for that stance to be forgotten may well have long been with us now.

This notion will occur immediately after a careful reading of the Central Bank of Malta Governor Mario Vella’s excellent reviewing speech on our economy, as delivered at this year’s annual dinner of the Institute of Financial Services (Malta).

It is a long speech (11 solid pages) and it certainly pushes the reader to introspectively ask into what category of discourses it should be placed. Is it a policy speech? A well-crafted bringing together of economic statistic sweets encased in juicy Lindt Lindor chocolate wrappers? A grabbing of some important specific ECB style of inductive modelling?

It most certainly is not political hack stuff, and all along it certainly is a very clever analysis of what broad-based  economic management should really be all about: in essence that this is a never-ending day-to-day task where the road is all that there is… no such thing as a final “we’re there now” smug assertions about ourselves… ever.

All of this seems to suggest that there’s no such thing as happy-end content ever for the objective economist.

As one reads through this speech the factually undeniable reality of so many good things going on around us these days in Malta’s economy is continuously placed into what some might even go as far as to describe as analogous to the scriptural “seven years of ġid (wealth), and then seven years of għaks (destitution)” framework model.

 But, like Vella (who mentions him at the end of his speech), those of us who have followed Schumpeter’s economic history modelling will easily see that the capitalist switch, in that it creates the seeds of its own destruction, is in fact mainly based on a continuous central process of transformation.

In the case of tiny Malta this is so particularly because ours is a reality which now – whether we want to or not, and totally irrespective of what we can, and must do, about it – is ever more an integral part of what Keohane and Nye wrote about in 1977 in their seminal Power and Independence. 

If international trade, part of the lifeblood of our beloved country, is grabbed and abused by Trump, the Chinese, and others, to become, not for the first time in international economics, a “plaything” for their conflictual strutting on the international stage, how can Malta not be affected? Vella cites very recent OECD data that shows world trade growth slowing down in the first half of this year as one example, among others, of how the external environment is changing even as we write/speak.

It really is serious stuff if our banks are now struggling to use their big current liquidity at the Central Bank much more

Many asset classes presently being in negative territory, worrying trends in several emerging markets with whom not only the EU but also Malta trade, Brexit (but that, even if a big disaster for the foolish Brits, will soon pass!), the challenge of what monetary policy the ECB will be doing after the end of QE, these are all hinted at in Vella’s tour-de-force of the many challenges facing the Maltese economy as we will be moving into the 2020s.

But there is also a purely and strictly domestic dimension to Malta’s economic management. And very often this gives a semblance of not being about economics at all, while still factually impinging on this country’s total well-being (economic, social, cultural, moral, and whatever).

If ours is a too slowly-moving national justice system, if EU statistics on education advancement keep churning about us worrying trends even as we are on the verge of the big expected VET overhaul,  if several of our quality of life indicators keep hiding serious pockets of poverty, if we are at a junction where brave decisions have to be taken about re-dimensioning downwards certain activities (e.g. the building and construction industry) plus giving brave fillips to others (e.g. agriculture and exporting manufacturers), if all of this, plus more, may not exactly appear to be stuff which bankers sumptuously dining at the Hilton’s absolutely fantastic cuisine output would want or expect to receive at a lovely evening, then we really need to sit down again and have a fresh discussion about how we all read the national economic management process and content.

But do bankers really care about economic management, or is it only their balance sheets (and, as in Nick Leeson’s Barings, “their bonuses!”) which are of concern to them?

Many, yes, possibly fit exactly that picture, but not the majority. Some may retort that “we have enough on our plate to be pushed into these areas”. And, indeed, they may even be right. It really is serious stuff when our formerly beautifully working corresponding networks (in my time at Barclays Bank we used to smartly call them “agency arrangements”) are not working like clockwork.

It really is serious stuff if our banks are now struggling to use their big current liquidity at the Central Bank much more (how does one interpret current saving trends among the Maltese?). It really is serious stuff if some in our banking fraternity might be feeling that shadow banking, or bitcoin, are threats down the road.

Which is all hardly the right attitude to what should really be the big wide world of which they also form part and within which they, nolens volens, have to exist and work.

To sum up, this really is a most absorbing speech that contains much that should set thinking finance men doing exactly that, think hard. It is a speech that I strongly recommend all to read slowly and absorb. Copies of it may be obtained by e-mailing a request to

John Consiglio lectures in the Department of Banking & Finance at the University of Malta.

This is a Times of Malta print opinion piece


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