Central Bank welcomes publication of the International Monetary Fund's assessment of Ireland's financial sector

• First such review since financial crisis and continues the normalisation of our relationship with the IMF post program;
• Recognises the ongoing repair of the financial system and the progress made by the Irish authorities in strengthening regulation and supervision since the onset of the financial crisis;
• Highlights that financial vulnerabilities remain, and makes recommendations for further work, which will be considered by the Central Bank in conjunction with other Irish and European authorities.

The Central Bank of Ireland today, 28 July 2016, welcomes the publication of the International Monetary Fund’s Financial Sector Stability Assessment for Ireland. This report has been published following completion of the IMF’s review under their Financial Sector Assessment Program (FSAP).

It was the first such review by the IMF since the financial crisis and examined the much transformed Irish financial system and the associated regulatory and supervisory architecture. In view of the substantial changes, the review provided a timely examination of Ireland’s financial sector and legislative, regulatory and supervisory framework. 

The IMF concluded that the "authorities have been effective and vigorous in strengthening prudential regulation and supervision, implementing the lessons of the crisis, and keeping up with developments in European and international good practice".

While recognising the considerable progress that has been made, the IMF also noted that vulnerabilities remain, including those related to highly indebted households and smaller domestic firms, and the likely negative effects on the Irish financial system of the UK vote to leave the European Union. The global scale of the international funds industry in Ireland is also noted, with recommendations that the Central Bank continues the innovation, collaboration with other agencies and monitoring already established in this area.

Deputy Governor (Financial Regulation) Cyril Roux said

“The report highlights the transformation of the regulatory landscape and supervisory approach that has taken place in recent years.  The introduction of new European and local regulations, the increased depth of the supervisory engagement and our focus on systemic and emergent risks across the system enable the Central Bank to deliver effective supervision. These assessments are an important opportunity to have our supervisory practice publicly evaluated against international standards.

We welcome the recognition by the IMF of the progress made since the financial crisis, note the further recommendations made and will consider them, in conjunction with other authorities where relevant, as part of our ongoing work.”

The IMF also published today its Article IV review of the Irish economy. It sets out the views of IMF staff on a broad range of issues including the current position of the economy and its medium-to-long term prospects, medium-term fiscal policy, as well as financial and banking policy. 

Notes

Further information on the IMF and Ireland here.