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Financial stability is a core function of central banks. A sound
and stable financial system is conducive to the efficient
conduct of monetary policy. In terms of article 5 of the
Central Bank of Malta Act, the Central Bank of Malta is responsible
to ensure the stability of the financial system. In fulfilling
this statutory obligation, the Central Bank of Malta plays
a key role in maintaining the stability of the domestic financial
system, whilst further contributing to that of the Eurosystem.
In terms of article 17 of the Central Bank of Malta Act, the
Central Bank of Malta is also responsible to provide financial
support through its ‘lender of last resort’ (LOLR)
function to safeguard the stability of the banking sector. This
function is normally resorted to in exceptional circumstances
when there is a perceived threat to the stability of the financial
system.
Malti
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