The Central Bank of Ireland is right to continue to push resilience as key against future shocks to Ireland’s economy, that’s according to the outgoing Deputy Governor.
Sharon Donna has been speaking this week at the Institute of International and European Affairs as she prepares to step down.
“Ireland has a globally oriented financial system. So while we have, of course, important domestic players, much of our financial services sector is actually internationally oriented.”
That means Ireland is vulnerable to international, global shocks.
“Geopolitical risk, climate and nature related risks, and digitalisation…and also to some extent, demographics” are all areas with potential dangers, Sharon Donna warned.
War, climate change and technological developments like artificial intelligence are all of interest to the Central Bank.
“These huge structural changes that are happening are very much on our agenda.”
“Particularly looking at Ireland through these lenses of our economy being a small open economy and our globally oriented financial services system.”
So what is the Central Bank doing to prepare and shield us?
“All of those risks and uncertainties are really driving much of our thinking, whether it’s our economic work, our advice to the government, etc. and you won’t be surprised to hear me say that, central, I think, to all of these things is the idea of resilience.”
“Whether that’s the resilience of the public finances, topical in the context of the budget [this week], the resilience of the banks, the resilience of the wider financial system, the resilience of corporates and small enterprises, and also the resilience of households.”
“And I think that idea of building resilience because of these structural changes and also because we know risks, can emerge that we haven’t necessarily prepared for.”
The unexpected, like the Covid crisis, underline, she says, the need to have a tough, strong system in place.
In June of this year, Sharon Donna was appointed to a senior role at the European Central bank. She is expected to stand down as Deputy Governor of the Central Bank of Ireland for financial regulation by the end of the year.
Meanwhile, she has dual roles with a unique overview of the economic system of Ireland and across the Eurozone.
Despite being part of the Euro and the European Central Bank, Ireland’s own central bank continues to have a wide role including acting as the state’s watchdog for monetary and financial stability. It says this is something it does whilst “ensuring that the financial system operates in the best interests of consumers and the wider economy.”
The European Central Bank says as well as issuing Euro, it supervises the banking system, aims to preserve financial stability and sets interest rates across the Eurozone.