November 29, 2020
Business News

Ireland’s top banker makes his first keynote speech in Waterford

The Governor of the Central Bank of Ireland, Gabriel Makhlouf, travelled to Waterford to make his first keynote speech since he was appointed as Ireland’s top banker.

During an address at Waterford Institute of Technology, Mr Makhlouf set out the key challenges, risks and transitions that Ireland faces.

Speaking to students and staff at WIT and the Chamber of Commerce this week, Governor Makhlouf highlighted the vulnerability of the Irish economy, particularly in the context of Brexit and the risk of escalating trade wars.

He said: “Building economic resilience is not like building a bulwark and then assuming the job is done. There is no one-off solution to the challenge of building resilience. It is a continuous process, involving individuals, households, businesses, institutions and authorities, such as the Central Bank, both at home and abroad.”

While acknowledging the substantial improvements in resilience made over the last decade, citing reductions in public and private sector indebtedness, he identified four key transitions which pose challenges to the Irish people:

  • Brexit;
  • Climate change;
  • The pace of technological change;
  • Profound changes which are taking place in the financial system.

Governor Makhlouf highlighted that given Ireland’s international interconnectedness, building resilience through these fdifficult transitions is essential.

He said: “For me it is about continuing to focus on the fundamentals, about managing the short-term while planning for the medium term. It is about ensuring our frameworks are fit-for-purpose and learning the lessons of the past while preparing for the future.  It is also about being prepared to challenge ourselves.”

Mr Makhlouf noted that the mortgage measures are a permanent feature of the mortgage market and have been key to enabling sustainable lending. He added: “It is important to take stock, learn lessons and continue to develop.  In particular it is important to consider how the suite of macroprudential buffers interact not only with each other but also with those of microprudential supervision – arriving at a consistent and holistic view of capital for the banking sector – and the other key macroprudential tools in operation. We must continue to look at whether the objectives and scope of our wider macroprudential framework remains appropriate to the current environment.

“Given the growth in market-based finance in recent years, there is growing focus on understanding the financial stability risks posed by these developments. This is particularly important given the ‘lower for longer’ monetary policy environment we find ourselves in. It is important for our macroprudential framework to grow and widen to reflect these developments with policies to promote financial stability and to mitigate the impact of negative shocks on the real economy.”

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