CBM Revises Directive on Macro-Prudential Policy in Context of CRD5
CBM has revised the Directive No. 11 on macro-prudential policy to transpose elements of the revised Capital Requirements Directive (CRD5). This Directive lays down the objective of macro-prudential policy and the way CBM intends to implement the policy. The revised Directive No. 11 came into force from December 28, 2020. CBM also published a notice on the outcome of public consultation regarding the proposed amendments to the Directive No. 11. CBM did not receive any feedback to the proposed revisions to Directive No. 11. This Directive implements ESRB recommendations on macro-prudential mandate and intermediate objectives and instruments, along with the implementation of mandates in CRD5 and CRR2.
Directive No. 11 shall apply to credit institutions and systemic investment firms as defined in the Investment Firm Directive and the Investment Firm Regulation. To fulfil the ultimate objective of macro-prudential policy and increase the resilience of the financial system, CBM shall develop, issue, and apply macro-prudential instruments as appropriate. Among others, CBM
- may introduce a systemic risk buffer of Common Equity Tier 1 capital for the financial sector or one or more subsets of that sector on all, or a subset of exposures as referred to in paragraph 18 of this Directive, to prevent and mitigate macro-prudential or systemic risks not covered by CRR and by Article 130 of the CRD5 and paragraphs 33 to 49 of this Directive.
- shall, acting jointly with the competent authority, identify, on a consolidated basis, global systemically important institutions (G-SIIs), and, on individual, sub-consolidated, or consolidated basis, as applicable, other systemically important institutions (O-SIIs), which have been authorized in Malta.
- shall set the countercyclical buffer rate, expressed as a percentage of the total risk exposure amount, calculated in accordance with Article 92(3) of the CRR of institutions that have credit exposures in Malta and the buffer shall be between 0% and 2.5%, calibrated in steps of 0.25 percentage points or multiples of 0.25 percentage points.
In accordance with the ESRB Recommendation on intermediate objectives and instruments, CBM shall periodically assess whether the macro-prudential instruments under its direct control or recommendation powers are sufficient to effectively and efficiently pursue the ultimate objective of macro-prudential policy as established in the ESRB Recommendation on macro-prudential mandate, along with the intermediate objectives as defined in paragraphs 10 and 11 of the Directive. If the assessment indicates that the available instruments are not sufficient, CBM shall include additional macro-prudential instruments. CBM shall duly inform ESRB in case of any change in the set of intermediate objectives and macro-prudential instruments.
Related Links
Effective Date: December 28, 2020
Keywords: Europe, Malta, Banking, Securities, CRD5, CRR2, Macro-Prudential Policy, Systemic Risk, IFD, IFR, CBM
Featured Experts

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
BDE Maintains Countercyclical Capital Buffer for Banks at 0%Related Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.