Global risks to Irish financial system have intensified - Central Bank of Ireland’s Financial Stability Review
27 May 2026
Press Release
Risks to Ireland's financial system from the global environment have intensified, Central Bank of Ireland has said today.
The Financial Stability Review, published today, assesses the risks to and resilience of the Irish financial system.
A persistent global energy supply shock triggered by the conflict in the Middle East, the risk of a correction in financial markets, potentially amplified by financial vulnerabilities in parts of the global non-bank sector, and increasing cyber risks could create challenges for Ireland. If the conflict persists for longer than expected, there is the potential for more than one vulnerability to be triggered at the same time.
Today’s review emphasises that Ireland's financial system is starting from a position of strength, but that resilience must be protected.
The conflict in the Middle East has disrupted global energy supplies. If it intensifies or continues for longer, it will push up inflation, slow economic growth and increase costs for Irish households and businesses. Ireland's dependence on imported energy and international trade means the country is particularly exposed to these global developments.
Valuations in the artificial intelligence sector have reached high levels, with an increasing amount of investment in the sector funded by debt. Any reassessment of the sector could have wider economic effects. Growing use of private credit markets to fund AI and tech companies creates additional risks.
Cyber risks are also increasing with heightened geopolitical tensions and rapid developments in AI capabilities. The evolving cybersecurity landscape requires continued strengthening of operational resilience capabilities by the financial system.
The Government’s finances remain strong, but there are underlying vulnerabilities. Budget surpluses depend on corporation tax revenues. Without these receipts, the budget balance is projected to remain in deficit, leaving the State exposed if the global economy weakens or multinational activity is affected.
Commenting on the publication, Governor Gabriel Makhlouf said: "Ireland's financial system and economy have shown remarkable resilience through multiple crises in recent years. However, the world is in an extraordinary period of change. While we start from a strong position, today’s report shows Ireland faces intensified risks from the global environment. These include the energy shock, high valuations vulnerable to adjustment, and cyber and AI threats.
“A sustained energy shock could intensify cost pressures for businesses and households. While the domestic economy is expected to continue growing, this will be modest growth, and it will have less room to absorb shocks.
“This is why preserving resilience is so critical right now. Strong capital buffers in our banks, prudent lending standards, and robust operational defences are essential to ensure the financial system continues to serve households and businesses. In an environment where growing global debt has reduced many countries' capacity to respond to shocks, prudent fiscal management is more important than ever.”
ENDS
Further information
Martin Grant: [email protected] / + 353 86 078 7868
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Notes to Editor