On 5 June, it is expected that the European Central Bank take decisions which will have an important impact on the Eurozone.

A strong hint by ECB president Mario Draghi this month that the ECB will act against the dangers of low eurozone inflation has led markets to conclude that it will move to negative interest rates – charging banks which use its overnight deposit facility.

For Mr Draghi it will be a chance to demonstrate his credentials as a bold central banker after the dramatic impact his words two years ago that he would do all that it takes to save the euro are credited with having turned the fortunes of the battle to save the euro.

If it does so, the ECB would be the first of the big central banks to test such a step. The objective would be to weaken the euro and encourage banks to lend more to credit-starved companies in Europe’s weakest economies.

The ECB's deposit rate is now zero. Cutting it would effectively charge banks to park their money at the ECB overnight, which might be an incentive for them to lend the money instead.

But what holds true for decisions taken at ECB level and affecting the eurozone as a whole may have quite different impacts on small Malta. The banks in Malta have tended to follow rather sluggishly the repeated cuts in interest rates as ordered by ECB.

This time however, if the ECB cuts the deposit rate to below zero, the banks will have to pay just to park their money at the ECB overnight, which they do in quite significant numbers, sources told this paper. Will the banks absorb this additional cost or find new ways to park their liquidity or will they offload the additional costs on to their clients, sources near the Central Bank of Malta who spoke to this paper asked.

Speaking to the House Economic and Financial Committee last week, Central Bank Governor Josef Bonnici pointed out that Malta did not seem to follow the ECB trends along with countries described as financially stressed, although Malta itself is not financially stressed.

Earlier, when presenting the Central Bank’s annual report, Professor Bonnici seemed to doubt the ECB would use what is being called the ‘big bazooka’ at its 5 June meeting, but, albeit with some reservations, this is what seems to be happening on that day.