Financial Stability Review 2026 I

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Global energy supply shocks and geopolitical tensions have intensified risks to the financial system.

High valuations in financial markets remain vulnerable to adjustment, particularly in the AI sector.

Cyber risks continue to intensify amid increasing geopolitical tensions and rapid developments in AI.

Vasileios Madouros, Deputy Governor, Monetary and Financial Stability, Central Bank of Ireland

Since our last Review, risks facing Ireland’s financial system from the global environment have intensified.

The emergence of a global energy shock has implications for growth, inflation and financial conditions worldwide.

The ultimate impact will depend on the intensity and duration of the conflict in the Middle East.

High valuations in financial markets remain vulnerable to repricing, and financial vulnerabilities in parts of the non-bank sector globally could amplify market stresses.

Ireland’s financial system and economy have demonstrated substantial resilience in recent years but are vulnerable to risks stemming from developments in the rest of the world.

Navigating this uncertain environment requires preserving financial and operational resilience, so that the financial system can continue to serve households and businesses, in good times and in bad.

 Find out more: centralbank.ie/FSR

Since the last Review, risks facing the domestic financial system from the global environment have intensified. The materialisation of a global energy shock will have implications for growth, inflation and financial conditions. While the global financial system has so far been resilient to the shock, and markets have continued to function in an orderly manner, the ultimate impact will depend on the intensity and duration of the conflict in the Middle East.

The potential for multiple risks to materialise simultaneously in this environment has increased. A further escalation in the conflict, or a prolonged supply-chain disruption, could trigger multiple pre-existing vulnerabilities across the financial system, for example high AI valuations combined with debt-driven investments, exposures to the growing private credit market, and continuing liquidity mismatch and high leverage among certain global non-bank financial intermediaries (NBFIs). These financial vulnerabilities exist against a backdrop of declining fiscal space in many countries – limiting their capacity to respond to the energy shock or to prepare for slower-moving structural changes such as climate transition. Beyond financial risks, cyber risks also continue to intensify amid heightened geopolitical tensions and rapid developments in AI.

The domestic financial system and economy remain resilient but are vulnerable to these elevated external risks. This highlights the importance of preserving resilience to both financial and non-financial risks (including cyber and wider operational disruptions) for domestic financial intermediaries. 

Financial Stability Review 2026: I | pdf 999 KB Complex graphic detailing the Risks.

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