Financial instability in any one country does not help attractiveness of entire Med region, says Edward Scicluna

Addressing the Annual Conference of Mediterranean Central Banks held in Istanbul, Turkey on 31st October, Central Bank of Malta Governor spoke of the obligation Mediterranean countries have to explain their position and how that ties into the rest of the region, so that instability does not hinder perceptions among investors.

His comments came during a panel discussion entitled: Central Banks on the way out of the COVID-19 crisis, but facing new global challenges.

The panel discussion/session was chaired by Prof Şahap Kavcıoğlu, Governor, Central Bank of the Republic of Türkiye with participating speakers Boris Vujčić, Governor, National Bank of Croatia and Saddek Omar Ali Elkaber, Governor, Bank of Libya.

The session focused on the new challenges that central banks have been facing and are facing in 2022, namely the link between the surge in energy and food prices and increase in inflationary pressures and the issue of uncertainty about future economic developments and the role of central banks amid the current geopolitical tensions.

In his intervention, Governor Scicluna spoke about the challenges the monetary policymakers are facing in the current macroeconomic and geopolitical environment, and the obligation Mediterranean countries have to explain their respective position and its relevance to this region. This is particularly so as financial instability in any one country does not help the attractiveness of the whole region in the eyes of the investor. The Governor stressed the importance that decisiveness in tackling high inflation must come with the flexibility to address the possible side-effects from policy normalisation.

In concluding, the Governor said that fiscal policy should be deployed to support the most vulnerable by means of targeted and temporary measures so that central banks’ effort to restore price stability is not jeopardised. At the international level, there is scope for greater cooperation to prevent financial stability risks from materialising and to bring inflation down without jeopardising economic and social development. 

This joint conference, entitled Building Resilience in Uncertain Times: Safeguarding Financial Stability, Encouraging Investments – A View from the Mediterranean Countries was organised by the Organisation for Economic Cooperation and Development (OECD), Banco de España, and the European Institute of the Mediterranean (IEMed). The joint conference was hosted at the OECD Istanbul Centre for Global Relations.