I must firmly rebut the claim by correspondents Piero Ugolini and Richard Nunn (‘Surplus and deceit’, June 25) that the Central Bank of Malta could not have acted as the bank of last resort in the case of National Bank of Malta because it was not requested to. The moral obligation is a natural one, which is one reason why banks have mandatory liquidity deposits at central banks. Witnesses in court have clarified that this natural course was thwarted, and in retrospect the ulterior political motives are clear.

What’s more, at the time I myself made doubly sure at a meeting of board members of the National Bank of Malta with the CBM’s senior official Henry de Gabriele that he heard my unequivocal warning that it was the prior duty of the Central Bank to act as bank of last resort.

Instead, unfortunately for all, the CBM was following a mistaken government initiative which accelerated the withdrawal of funds and resulted in the damage to NBM shareholders – now declared unconstitutional by our courts. “Unthinkable” was the word used by the Malta Central Bank Governor in response to the then PM proposing to ride roughshod over the Central Bank’s own classic Bank of Last Resort provisions which stated:

“Relations with credit and financial institutions – 30: The Bank may act as banker to credit and financial institutions in Malta and may open accounts for credit institutions and financial institutions. The Bank may also open accounts with credit institutions.” This last resort function is common to all central banks everywhere.

How differently things have evolved in other parts of the world and particularly in America. For example, at the beginning of Alan Greenspan’s chairmanship of the US Federal Reserve board, a financial market situation arose on October 20, 1987 – ‘Black Monday’ – in which a total fiduciary collapse was threatened but was stopped short by the most important decision of his life reflected in this press release.

“The Federal Reserve, consistent with its responsibility as the nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” The Central Bank of Malta failed this same test.

It also failed to protect shareholders’ interests as required by law in the appointment of its Controller, who simply dismissed my pertinent enquiry on the matter at the CBM with an equivocal personal remark!

Indeed, central banking exists to help balance the effects of economic cycles especially in terms of price stability. In these cycles there is inherent unpredictability which threatens smooth passage from one cycle to the next. The NBM was a pivot well before the Central Bank came into being, helping Malta, a newly independent micro-state, and in doing so had to adopt policies to navigate the side-effects of the adoption of political decisions by Mintoff that culminated in the well-known dramatised global sovereign bargaining battle.

Politicians from both sides of the House should come together to understand the facts and to work on a solution

In practical terms, the influx of foreign residents was temporarily halted by his fight with Nato; but retrospectively we can see from the Central Bank’s own property price statistics as published in the Central Bank Annual Report 1973 that the NBM directors were proved right to have decided not to bankrupt developers and carry them through the island’s economic downturn. The testimony of the owners of mega hotels like the Corinthia and Preluna can attest to this.

It is truly a tragedy that while Prime Minister Dom Mintoff in Parliament said the only reason he could find for the problem was panic because of my father’s death on November 27, 1973, his chosen course of action robbed him and Malta, even today, of the chance to discover dynamic approaches to fiduciary instruments of distributive justice.

Unfortunately, the two foreign experts, Ugolini and Nunn, also missed the Extraordinary Resolution of the NBM shareholders in AGM passed to face up to the market challenge by creating a new cycle of credit on property and work, such as the situation objectively called for as a calm development and as the statute of the bank indeed had already included as an objective at its establishment in 1946.

This important development for the future was thanks to the foresight and the pivotal role of one of the two vice presidents of the bank, my late father Frank Cassar Torreggiani, who knew the Prime Minister wanted to take over the banking sector for the State, finally seizing  the opportunity to do so in the panic withdrawals on my father’s death on November 27, 1973.

The Governor of the Central Bank, whom Mintoff wanted replaced by somebody Maltese, was in fact aware of the proposed cycle because my father had arranged for me to visit him at the Central Bank and he was encouraging the initiative to create this classic ‘credit fonciere’.

Little wonder then that his immediate deputy wrote at the time, after having left the Central Bank before the takeover event, that an investigation into the Central Bank role in the matter was warranted by the NBM issue. In fact, this well-timed resolution was passed unanimously by the General Meeting. It was and till today remains consonant with the Central Bank’s own development objective, which was first acted upon 15 years later to pull back the housing bond market in Malta into the commercial cycle.

It is this resolution, which the experts Ugolini, Nunn and Chilton failed to spot, which makes it so unfair to continue to characterise the shareholders and directors of the NBM as irresponsible.

Rather than thinking myopically and selfishly, politicians from both sides of the House should come together to understand the facts and to work on a solution that once found may be useful in other micro developing states also. Indeed, in its archives, the European Parliament Petitions Committee has this approach to Malta, pointing to a research and development path to the future of the euro as a deep reconciliatory reserve for the globe.

For indeed, peace and prosperity, the one treasure of peoples, culminates in loving our enemies, something mankind needs desperately, particularly in Malta today. The NBM saga has taught me just that. I shall never forget hearing an Undersecretary of the German Foreign Ministry in Bonn telling us, as the chairpersons of all the European movements in Europe, they had a saying in their corridors, “Remember Mintoff”, to justify the then pending application by Malta to join the EU being blocked as Germany’s only foreign policy problem at the time. The European Union does indeed have a bright future in the measure that in the euro we discover the hidden potential of loving even enemies.

Only this spirit of truth can in our memories, our understanding and our will balance beautifully the goodness of order giving us as Europeans the best basis of advancing a cosmopolitan global civilisation of love largely in the global financial economy. In this spirit, science and faith can indeed progress hand in hand methodically. True dynamic objectivity is best experienced in being balanced in prudent subjectivity.

So finally central bankers generally, but in particular the Central Bank of Malta as well as the MFSA and the Minister of Finance, would do well to help those in politics and finance to give heed to this appeal:

“It is vital that government leaders and financial leaders take heed and broaden their horizons, working to ensure that all citizens have dignified work, education and healthcare. Why not turn to God and ask him to inspire their plans? I am firmly convinced that openness to the transcendent can bring about a new political and economic mindset which would help to break down the wall of separation between the economy and the common good of society.”

(Pope Francis quoted at the Mass for the opening of Malta’s 13th Parliament on June 24, 2017)

Quo vadis means ‘where are you going’ and was famously attributed to Christ meeting St Peter who was fleeing Rome during the persecutions of Nero.