ACT No. XX of 1981 AN ACT further to amend the Central Bank of Malta Act, 1967.

I assent.

ANTON BUTTIGIEG

President

23rd June. 1981

ACT No. XX of 1981

AN ACT further to amend the Central Bank of Malta Act, 1967.

BE IT EN ACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Par1iament

assembled, and by the authority of the same, as follows:-

(1) This Act may be cited as the Central Bank of Malta

(Amendment) Act. 1981, and shall be read and construed as one with

the Central Bank of Malta Act, 1967, hereinafter referred to as "the

principal Act".

(2) This Act shall be deemed to have come into force on the

1st day of January. 1981.

Section 2 of the principal Act shall be amended as follows

(a) in the definition of "convertible" the words "at exchange

rate margins consistent with the Articles of Agreement of the Inter­

national Monetary Fund" shall be deleted; and

(b) immediately after the definition of "Minister" there shall

be inserted the following new definition

" "Posterity Fund" means the fund established under section

28A of this Act;".

Section 15 of the principal Act shall be amended as follows

(a) for paragraph (c) thereof there shall be substituted the

following

"(c) purchase or sell gold or silver coin or gold, silver

or other precious metals in bullion form

Provided that the Bank shall endeavour to hold gold

bullion having a current market value (reckoned at the end of

each month at the average London Fixing Price during such

month) of not less than the value of the Bank's notes and coins

issued, excluding coins issued for numismatic purposes; s ohow­

ever that at no time shall its holding of gold bu11ion be red u c ed

to less than 500,000 troy ounces;";

(b) for item (i) of paragraph (j) thereof there shall be substi­

tuted the following

"(i) gold or silver coin or gold, silver Of other pr e c i ou s

metals in b u1l i on form;";

(c) in paragraph (1) tħereof, for the words "within twelve

months" wherever they occur there shall be s u b s t i tut e d in each

case the words "within two years;';

(m) thereof there shall be

(d) immediately after paragraph

added the fol1owing new paragraph

purchase and sell intemationally traded commo­

"(mm)

dities and quoted commodity shares;", and

(e) in paragraph (0) thereof, for the wo r ds "gold and silver;"

there shall be substituted the words "gold, silver and other precious

metals, internationally traded commodities and quoted commodity

shares;".

Section 16 of the principal Act shall be am en d ed as follows

(a) in paragraph (b) thereof, immediately a f t e r the words

"paragraph (h)" there shall be inserted the words "and paragraph

(mm)"; and

(b) in paragraph (i) thereof, the words "subsection (2) of"

shall be deleted.

For section 19 of the principal Act there shall be substituted

the following

(l ) The Bank s h all a t all times maintain a reserve

of external assets consisting of gold, silver or other p r ec i ou s

metals, convertible foreign exchange, internationally traded

commodities or guoted commodity shares.

(2) The value of the reserve of external assets

shall not be less than sixty per centum of th e value of the

Bank's notes and coins issued. excluding coins issued for

numismatic purposes, and of the deposit liabilities of the

Bank

Provided that the said minimum percentage may be

varied by the Minister on the recommendation of the Board,

and such variation shall be duly notified in the Gazette.

(3) The assets h e ld in accordance with s ub s e cti o n

(l) of this section shall consist of one or more of the follow­

ing assets approved by the Board

gold bullion;

(a)

silver or other precious metal bullion

(b)

gold or silver coin;

(c)

(d)

cash;

(e)

bank balances;

(f)

money at call;

bi1ls of exchange;

(g)

(h)

Treasury bills;

negotiable certificates of deposits;

(i)

(j) time deposits with first class banks and finan­

cial institutions maturing with in two years;

(k) marketable securities

of

first

class standing

maturing within fifteen years;

(1) internationally traded commodities or quoted

commodity shares;

(m) any readily available international drawing

facility, which the Bank, after consultation with the Inter­

national Monetary Fund and with the approval of the

Minister, considers suitable for inclusion in such reserve.

(4) The securities held under the provisions of

paragraph (k) of subsection (3) of this section which mature

beyond five years shall not exceed twenty-five per centum of

the total assets referred to in that subsection.

(5) The total value of the assets held under the

provisions of paragraph (l) of subsection (3) of this section

shall at no time exceed fifteen per centum of the total vaIue

of the external reserve of the Bank.".

6. Immediately after section 19 of the principal Act there shalI be

added the following new section

(I) There shall be a Committee to be known as

the Investment Committee, (hereinafter referred to as "the

Committee") which shall have the function of formulating the

policy to be folIowed by the Bank in the management of the

external assets held under section 19 of this Act and of

managing and control1ing the Posterity Fund established

in terms of section 28A of this Act.

(2)

The Committee

shall

be

appointed

by

the

Minister.

(3) The Committee shall consist of a Chairman

and ten other members and shall be composed as foHows

(a) three members. of whom the most senior shall

be the Chairman, selected by the Minister from among

directors or officials of the Bank;

(b) one member selected by the Minister from

among public officers in the ministry responsible for

finance;

(c) two members selected by the Minister from

among directors or officials of banks, or corporations

established by law or of companies in which the Govern­

ment or a corporation established by taw has a majority

interest;

(d) one member selected by the Minister from

among members of the trade union having the largest

membership in Malta;

(e) four m embers , being Members of Parliament,

two of whom shall be chosen by the Prime Minister and

the other two by the Leader of the Opposition.

(4) The Committee may act notwithstanding any

v acan cy in its membership, but, whatever the membership. it

shall not act unless six members are present.

(5) The Minister shall have power to make regula­

tions prescribing the procedure to be followed by the

Committee. Subject as aforesaid the Committee may regulate

.

its own procedure.".

7. Immediately after subsection (3) of section 22 of the principal

Amendment

Act there shal1 be added the following new subsection

The accounts of the Bank and the report aforesaid

"(4)

together with the accounts of the Posterity Fund laid with them

before the House under subsectian (6) of sectian 28A of this Act,

shall be debated by the Hause on a motion presented by the

Minister for that purpose as saon as practicable after he has

complied with the faregoing provisions of this section. Not less

than one sitting shall be allatted far the debate on such a motion.".

8. Far section 23 of the principal Act there shall be substituted

the following

( 1 ) Subject to the following provisions of this

section, the net profits of the Bank for each financial year

shall be determined by the Bank after meeting all current

expenditure far that year and after making such provision as

it thinks fit for bad and doubtful debts, depreciation in assets,

contributions to staff and pension funds and all ather reserves

and contingencies.

(2) The profits and losses which are attributable to

any revaluation of the Bank's net assets or liabilities in gold,

silver or other precious meta], commodities, foreign exchange

or foreign securities or shares, made as a result of any adjust­

ment of the external value af the Malta pound in terms of

sectian 38 of this Act shall be excluded fram the computation

of the annual profits and losses of the Bank and shall be cre­

dited ar debited, as the case may be, to a special account to

be called the Revaluation Account; and the balance in such

accaunt shall be dealt with in accordance with subsection (3)

of this section.

(3) With effect from the year 1985, and at inter­

vals of five years thereafter, the Minister shall as ear1y as

practicable after the end of such year or interval, make

proposals as to haw any debit or credit balance in the

Account at the end af the previous year shall be deaIt with

and shalI cause such propasals ta be laid before the House

of Representatives not later than the first sitting of the House

after the 30th day of April of the year in which the proposaJs

are made, together with a motion that the House approves

the said proposals. Not less than one sitting shall be allotted

for the debate on such a motion.

(4) After such al1ocations as are referred to in

subsections (2) and (3) of section 18 of this Act have been

made, the remainder of the net profits established as afore­

said shall be paid -

(a) as to such percentage thereof, being not less

than fifty per centum, as the Minister may direct, to the

Pasterity Fund; and

(b) as ta the balance

of

such

profits, to

the

Government."

.

9. Immediately after section 28 of the principal Act there shall be

added the following new section

(1) There shall be established a fund, in this Act

referred to as the "Posterity Fund", to which shaH be alloc­

ated

(a) by virtue of this Act and without further autho­

rity, any sum payable to the Fund under section 23 of

this Act; and

(b) such other amounts out of the Consolidated

Fund as may from time to time be authorised by an Ap­

propriation Act.

(2) The Posterity F und may also with the ap­

proval of the Minister be made open to participation by banks,

by corporations established by law, by companies in which the

Government or a corporation established by law has a

majority interest and by such other class or cIasses of persons

as the Minister may from tirne to time by order specify.

(3) The Posterity Fund shall be managed and

controlled by the Investment Committee established in terms

of section 19A of this Act and shall be administered for the

Committee by the Bank.

(4) The assets of the Posterity Fund may be in­

vested in Malta or overseas as the Committee may, with the

approval of the Minister, from time to time, determine.

(5) The Bank shall keep separate accounts for

the Fund. These accounts shall be audited by auditors ap­

pointed annually in telms of subsection ( l ) of section 21 of

this Act. The Minister may at any time request the Director

of Audit or such other person as he may appoint for the pur­

pose, to make an examination of, and submit a report on,

the accounts of the Fund.

(6) A copy of the annual accounts certified by

the auditors shall be transmitted to the Minister who shall

cause them to be laid before the House of Representatives and

published in the Gazette together with the Accounts of the

Bank as provided in section 22 of this Act.

(7) The net profits of the Fund for each financial

year shaH be detennined by the Committee and after making

sucħ provision as it thinks fit for depreciation in assets and

all other reserves and contingencies.

(8) The profits determined in accordance with

the provisions of subsection (7) of this section shall be paid

to the participants in the Fund in proportion to the amount

of their participation, the participation of the Government

being equal to all payments made to the Fund under subsec­

tion (l ) of this section.

(9) The profits received by the Government

in terms of subsection (8) of this section shall be utilised as

follows

(i) as to one-third to meet expenses required for

the purpose of defence, environmental conservation and

development, and infrastructura1 projects;

(ii) as to one-third as part of the contribution

payable out of the Conso1idated Fund under the National

Insurance Act, 1956, in respect of the year immediately

fol1owing the year in which the profits are paid;

(iii) as to one-sixth in viable investments in less

developed countries;

(iv) as to one-sixth as a special reserve for the re­

lief of hardship caused by natural disasters or famine in

Malta or abroad.".

10. For section 38 of the principal Act there shall be substituted

the following

The external value of the Malta pound shall be

determined and may be subsequently adjusted or suspended

by the Minister on the recommendation of the Bank and with

the consent of the Prime Minister, having due regard to the

obligations that Malta has assumed in accordance with the

provisions of the Articles of Agreement of the International

Monetary Fund. Notice of such determination, adjustment

or suspension shall be published in the Gazette at the earliest

opportunity." .

Section 39 of the principal Act shalI be amended as follows

11. (a) in subsection ( 1 ) thereof, for the words "other currencies"

there shall be substituted the words "other assets"; and

(b)

in subsection (2) thereof -

(i) for the words "from the parity" there shall be sub­

stituted the words "from the external value" and for the words

"with the parity" there shall be substituted the words

"in

terms of"; and

(ii)

the proviso thereof shall be deleted.

Passed by the House of Representatives at Sitting No. 514 of the 22nd June, 1981.

C.AGIUS

Speaker

C. MIFSUD

Clerk to the House of Representatives

Kastilja

Published by the .f n format i on Division

Ippubblikat mit-Taqsima tat-Tagħrif

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Printed at Ihe c.a.s. - Govertlment Prinling Press

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