Malta Commonwealth Third Country Programme
TRAINING WORKSHOP ON BANKING AND FINANCE IN SMALL STATES
Valletta, Malta: 11-19 April 2011
FINAL STATEMENT
The participants of the Workshop on Banking and Finance in Small States, held at Valletta, Malta, between 11 and 19
April 2011, having discussed a number of banking and finance issues, including international and domestic regulatory
frameworks, monetary and exchange rate policies, offshore banking, tax competition, financial market development,
and other themes of major interest to small jurisdictions;
1.
Recognise that banking and finance have large and multifaceted impacts on the economy of many small states and
that the soundness of this basic sector is crucial for economic development and resilience building.
2.
Recognise that the development and deepening of financial sector in small states pose special constraints,
irrespective of the stage of their economic development.
3.
Are aware that sound economic fundamentals, appropriate monetary policy frameworks and financial stability are
essential to promote the development of financial sector.
4.
Recognise the need for concerted supranational action to curtail contagion of financial crises especially in the
context of small states, possibly in the form of an international lender of the last resort for the provision of
emergency liquidity
5.
Are aware of the necessity of sound regulations, monitoring and control mechanisms over international financial
businesses, and the dangers associated with laxity in tax practices.
6.
Note the benefits of separating the monetary policy function from the financial regulatory function to promote
macroeconomic and financial stability.
7.
Note that soundly managed and reputable offshore centres perform a useful function internationally in sharpening
competition and in providing creators of wealth with a necessary degree of flexibility in developing their global
strategy, and that therefore national and supranational authorities alike should recognise this contribution to the
world's financial markets and shape their attitudes to the offshore centres accordingly.
8.
Note, at the same time, that there are advantages associated with tax competition, where such practices do not
encourage suspicious activities, money laundering and financial crimes. Small member states should have the
right to apply a tax regime in accordance with their country monetary policy and financial stability.
9.
Note further that those small states that are highly dependent on financial services may face proportionately large
negative impacts when compared to larger territories in their attempt to harmonise their tax regimes in line with
international standards and that a consultative and co-operative multilateral approach should be developed to take
this reality into consideration.
10. Recommend that authorities of small states should make every possible effort to promote good governance in
terms of accountability, and transparency in the public and private sectors and to adopt procedures to prevent
money laundering and terrorism financing, and comply with international standard disclosure requirements in order
to ensure good reputation.
11. Recommend that in line with a consultative and co-operative multilateral approach, regulatory authorities
expeditiously study the impact of the new Basel Accord on small states and unsophisticated banks, and present
findings of such studies at international fora for consideration. Technical assistance is needed for small states in the
area of capacity building and research on the policy issues such as Basel Accord and other international standards.
12. Note that the application of the International Financial Reporting Standards (IFRS) will impact significantly on
small states financial reporting specifically on financial institutions. Small states need to review expeditiously and
come with recommendations on the way forward.
13. Support the promotion of international networking among institutions and individuals concerned with banking,
finance and offshore activity, with the objective of fostering research and training activity on matters of direct
interest to islands and small states.
14. Express their gratitude and appreciation for the initiative and support offered by the Commonwealth Secretariat,
the Ministry of Foreign Affairs of Malta and the Islands and Small States Institute in organising the workshop.