Macroprudential Policy

What is Macroprudential Policy?

The aim of macroprudential policy is to safeguard financial stability. In doing so, macroprudential policy looks to ensure the financial system can absorb, rather than amplify, adverse shocks. This can be achieved by making the financial system more resilient,  limiting the build-up of vulnerabilities and mitigating against systemic risk. Crystallisation of systemic risk can result in the disruption to the provision of financial services caused by an impairment of all or parts of the financial system with serious negative consequences for the real economy. A resilient financial system is one that is able to provide services to Irish households and businesses, both in good times and in bad.

The Central Bank’s approach is to look to build resilience, proportionate to the level of systemic risk, when times are good, so that this resilience can be used when times are bad. Policy measures will be forward-looking and seek to reduce the potential for imbalances to accumulate, given that they could lead to financial distress.

The Central Bank’s macroprudential policy framework has three broad pillars:

• Policies relating to banks i.e. macroprudential capital buffers
• Policies relating to borrowers i.e. the mortgage measures
• Policies relating to non-banks - currently focused on Irish property funds  

Further information on the Central Bank's approach to Macroprudential Policy

• The Central Bank’s macroprudential for Irish-authorised GBP-denominated LDI funds (Apr 2024)
• The Central Bank’s macroprudential policy framework for Irish property funds (Nov 2022)
• The Central Bank’s framework for macroprudential mortgage measures (October 2022)
• The Central Bank's framework for macroprudential capital (June 2022)
• Systemic Risk Pack

Click on the sections to the right for more information