Malta fixed its currency for two decades to a basket, with little use of monetary policy, then moved via a period of exchange rate targeting, first to the basket and then to the euro within ERM2, together with some monetary and financial modernisation, to membership of EMU from 2008.
|Years||Targets and attainment||Classification|
|1974-94||currency fixed to basket, initially more for inflation control but later partly for competitiveness; repeated changes to basket (which becomes simpler, more transparent and more stable over time); devaluation 1992; monetary policy assigned to development, interest rates rarely changed; no autonomous foreign exchange market, little use of domestic monetary policy instruments; capital controls||augmented exchange rate fix AERF|
|1995-2007||1995-2004 exchange rate pegged to basket; some monetary and financial modernisation by now, including more or less active interbank money and foreign exchange markets and limited capital account liberalisation; currency into ERM2 in May 2005 (Malta joined EU in May 2004) within very narrow margins, capital controls eliminated, some more use of indirect monetary policy instruments||full exchange rate targeting FERT|
|2008-14||membership of European Monetary Union||currency union CU|
Selected IMF references: RED 1979 pp42-3, 59-60; SR 1986 pp4, 7; RED 1988 pp43-4, 87; RED 1994 pp29-33, 36-40; RED 1997 pp33-6, 41; SR 2007 p18.
Additional sources: Grech (2003); IMF (2004), chV, especially pp36, 40-41, 42-3.
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