“Central banks can play an important role in analysing longer term issues, independent of politics and of election cycles.” - Deputy Governor, Sharon Donnery

•  A core part of what the Central Bank does is to ensure stability, this enables people to plan for the future.
• Central banks can contribute to creating an environment where climate related financial risks can be more efficiently assessed and considered.
• Changing demographics is an issue that will have macroeconomic implications, an area we need to better understand.

Speaking at an event at TASC (Think Tank for Action for Social Change) Deputy Governor Sharon Donnery spoke about three long term issues that intersect across economic and social vulnerabilities: stability, climate change and demographics.

“Our task is to work towards solutions, from the short to the long term, that enable us to sustain the progress we have made and combat the biggest threats we face.

“One can think of stability as the broad objective of central bankers. Stability of prices, of credit, of the financial system.

“Stable prices help all households to plan for the future with confidence. Stability enables businesses to grow, to create new jobs. Stability enables governments to make sustainable, long term investment decisions in health, education or transport for example” she said. 

The Deputy Governor said that while the Central Bank looks at areas of economic vulnerability and TASC is focused on inequality, social vulnerabilities and change, it was important to remember that these vulnerabilities intersect.

Speaking about climate change, Ms Donnery noted the Central Bank has been working on the area of transitional risks. These can be thought of as the cost or effects of moving towards a low carbon economy and the uncertainties related to this timing and speed of the adjustment.

“Central banks can contribute to creating an environment where climate related financial risks can be more efficiently assessed and considered.  But first we must have clear definitions of what sustainable products are.

“Climate requires a coordinated global policy response, across countries and governments, across social, economic, public and private bodies.”

The Deputy Governor also spoke about the challenges societies will face with ageing populations and lower birth rates, “Public ageing costs come from pensions, health and long-term care for example, with knock-on considerations for public debt.

“A particularly alarming aspect of climate and demographic change is that they are challenges for right now not only for the future. It is not a question of will they, won’t they, but how do we best respond to them.”

Notes

TASC is the Think-tank for Action on Social Change.  Further information at www.tasc.ie.