In March and April 2013, there was an increase in resident Monetary Financial Institutions (MFI) holdings of debt securities issued by foreign governments of eurozone countries. These increases represented a reversal of the consistent downtrend in evidence since early 2012, the Central Bank of Malta told Times of Malta Business.

During 2012, resident MFIs reduced by almost a half their holdings of sovereign debt securities issued by eurozone countries other than Malta.

“The sharp decrease in such assets in part reflected a reduction in the exposure of a number of banks to certain eurozone countries which at that stage were showing signs of financial strains. This trend continued during the first two months of 2013 before being partially reversed in March 2013.

“The rebound in the purchase of eurozone sovereign bonds in recent months reflects an improvement in the way resident banks perceive eurozone governments and the financial situation in their respective countries, more generally.

“This improvement in investor mood was largely driven by reassuring signals associated with recent reforms under way in the eurozone governance and supervisory framework as well as a search for higher yields,” it said.

Resident MFIs include all banks licensed in Malta, including branches and subsidiaries of banks with headquarters abroad, as well as the Central Bank of Malta and money market funds.