Financial Stability Review 2025 I

"Risks and Outlook for the Financial System (June 2025)" (PDF 104.35KB)

Since December 2024, the risks facing the global financial system have risen. Rising barriers to trade, and a sharp increase in economic and trade policy uncertainty, have led to a weaker growth outlook and higher market volatility. Ireland is particularly exposed to increasing trade tensions and any associated external macroeconomic shifts, due to its economic openness and high dependence on US FDI. As at early June 2025, domestic economic conditions remain positive, although forecasts have been recently revised downwards with higher downside risks.

A re-emergence of financial market turbulence might lead to market losses and constrain firms and lenders dependent on market-based financing conditions. A deterioration in economic growth could raise credit risks of firms and households. The domestic banking sector has built up substantial resilience over recent years, but may face greater exposure to credit or market losses, if some of these risks materialise. This underscores the importance of continued prudent risk management and ensuring financial and operational resilience across the financial system. Further, cyber and climate related risks continue to be important sources of adverse shocks. The NBFI sector – globally and in Ireland – managed liquidity demands arising from the financial market turmoil in April in an orderly manner. Structural vulnerabilities persist within parts of the NBFI sector, however, highlighting the importance of continued progress in strengthening the regulatory framework for the NBFI sector at a global and European level.

Financial Stability Review 2025: I | pdf 1294 KB Exposure to trade tensions, Financial positions of Irish households and Vulnerabilities FSR 2025 I Chartpack | xlsx 1073 KB

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