Issue link: https://maltatoday.uberflip.com/i/1543552
The following are excerpts from the interview. The full interview can be found on maltatoday. com.mt as well as our Facebook and Spotify pages. PHOTOS: JAMES BIANCHI / MALTA TODAY The IMF recently warned about the concentration of lend- ing related to property. Many people see property not only as their home but as a long-term investment. But at what point can this concentration become a systemic risk? As long as the economy continues to grow, there is also a strong probability that the value of land and property will continue to increase, as more money circulates due to economic growth. So, it should not come as a surprise that, when compared to other countries, Malta shows a higher concentration in property. Commentators and analysts would do well to compare Malta not only with other countries, but perhaps with territories of similar size—or slightly larger—such as certain cities abroad, where you may also find this type of concentration in property. Is this type of concentration currently a cause for concern? I do not believe so. If you examine how national wealth is distributed, it is true that a substantial portion is in property. However, it is also true that there is a substantial amount held in liquidity—bank deposits, government bonds or stocks—which can easily be liquidated. Therefore, we are not seeing a situation where any individual or section of society would be under significant pressure to sell property, thereby pushing prices down, as sometimes happens in other countries where liquidity in the financial system and the economy is lacking. You said there isn't a property bubble. You believe property price growth is reasonable. What would need to happen for you to change this view? The term 'reasonable' means different things to different people, so let me clarify what I meant. I was speaking purely from an economic perspective. Property price increases of around 4–5%, which are moving broadly in line with the growth of gross domestic product—what the country produces and earns each year—are economically reasonable in that sense. That does not necessarily mean that, if I look at property from a social perspective, I would conclude that it feels reasonable to someone in the first-time buyer category, who may be struggling to keep up with prices that they experience as burdensome. That person might argue: "I need to take on a larger loan, incur greater expenses, and commit myself for much longer over the course of my working life in order to repay that debt." These are all different realities. As I mentioned earlier, property serves different purposes for different people, and each person will naturally assess what is "reasonable" from their own perspective. What worries you most: Proper- ty risk or cyber risk? You're essentially asking whether I'm more afraid of drowning or burning. The truth is, I need to be vigilant on both—both are real risks. They are risks that could create problems for the country and for the bank. At present, I am satisfied that we are managing these risks in an adequate manner, and in a way that also satisfies our regulators. But you can never say you have won this war. New developments are constantly emerging. You must continue running your business, while always keeping risk management at the forefront of your mind. A few weeks ago, Storm Harry caused significant damage across the islands, leading to material losses to homes and businesses. How are you assess- ing climate risk? These factors are being studied, particularly because our regulators—primarily the European Central Bank—have, in recent years, begun requiring detailed assessments of the impacts of climate change. And I can tell you that the scenarios we analyse go far beyond strong winds like those we recently experienced. They include more advanced and severe projections: Intensified storms, rising sea levels, prolonged droughts, even the emergence of new diseases. In other words, the type of climate studies we conduct examine catastrophic scenarios, so that we can then determine what measures need to be taken to ensure risks are managed as effectively as possible. Climate change is clearly a risk. There is little point in debating whether it is caused by human activity or not. It is happening. And if it is happening, we have an obligation to try to limit it as much as possible. Do you think Malta's current economic model is more opti- mised for growth or for resil- ience? I would like to answer it by saying that we should aim for an economy which, because it is growing, becomes increasingly resilient—or, conversely, because it is resilient, has more space to grow. In other words, the ideal is a win-win situation. But let me dig a little deeper. If you look at a map of Europe and notice a small dot at the bottom, you might say there is no logical reason why there should be a population there, nor why there should be an economy. And yet, historically, over hundreds of years, there has been a population here and it has grown. An economy has developed. Malta has consistently sought to maintain four or five sectors that are independent from one another. That independence is important. If one sector suffers a shock, the others are not hit as hard. At the same time, each sector had to be one where development on a small scale could still generate meaningful returns. We cannot rely on sectors that require massive scale in order to be viable because such sectors simply do not suit our size. No single large sector dominates. 5 maltatoday | SUNDAY • 1 MARCH 2026 INTERVIEW