One of the “selling points” put forward for joining the European Union and the euro was the fact that local banks could treat investments in Europe as “local investments”. This was considered as freeing up a great deal of the funds local banks had stashed in their vaults and deposited at minimal rates of return with the Central Bank. Large amounts that could thus be loaned out at profitable rates to boost profitability and dividends paid to shareholders.

If European Union decision makers agree to make a mandatory increase in commercial banks deposits with the Central Bank and with the European Central Bank, this would limit the amount of funds available for trade and loans thus cutting into the banks’ profitability at a time of austerity when growth should be on the agenda.

The Malta Association of Small Shareholders is concerned that European Union decision makers want to get deposits from the banks at a cheap rate to finance the excessive lending to inefficient operators by slumbering oddly at times ‘non-interventionist’ regulators.

■ Frans Buhagiar

Secretary

Malta Association of

Small Shareholders