ISLANDS AND SMALL STATES INSTITUTE
UNIVERSITY OF MALTA
Postal address: University of Malta, Msida MSD 2080, Malta
Secretariat: Tel/Fax: +(356) 21344879: email: islands@um.edu.mt
Director: Tel/Fax: +(356) 21340335: lino.briguglio@um.edu.mt
Director: Professor Lino Briguglio
THE GLOBAL FINANCIAL TURMOIL AND SMALL STATES
Prof Andreas Antoniou, Dean of the Faculty of Economics and Management at the
Philips College in Cyprus, talking during a public lecture on the theme “The Global
Financial Turmoil and Small States” said that there is an on-going debate amongst
economists on the consequences of an increasingly globalised world economy on small
states. As is well known, for small states, “global connectedness” is the only way to
prosperity in an increasingly integrated, and technologically sophisticated, global
economy.
The public lecture organised by the Islands and Small States Institute at the University of
Malta was held on Tuesday 21 April 2009. Prof Antoniou focused his lecture on
problems encountered by small states as they often lack some of the key features of
“normal-sized” countries, such as armies, full-fledged diplomatic missions and tax
collection services. Therefore, they often offer interesting case studies to explore
relations between them and larger, richer or more powerful neighbours or partners.
Professor Antoniou discussed the various methods Central Banks have adopted to
overcome the excessive exposure to external shocks by small states. These include
significant injections of liquidity, the lowering of collateral requirements, asset swaps,
longer-maturity refinancing operations, intervention in foreign exchange markets, cooperation among central banks in their open market operations, monetary
accommodation, quantitative or credit easing, capital injections into banks and other
financial institutions, substantial fiscal stimulus
packages and, in some cases, nationalisation of
banks.
Professor Antoniou argued that in some cases,
small states like Iceland and Latvia, the exposure
to external forces has resulted in major blows to
the economy. Countries like Malta and Cyprus
have been to an extent sheltered, because they
formed part of the Eurozone.
Prof A.Antoniou addressing the audience