Economics Roundtable hosted by Governor Philip R. Lane

When 08 September 2017 12:30 PM

On Friday 8 September, the Central Bank hosted an Economics Roundtable with external stakeholders. The annual roundtable, which has been running since 2013, is an opportunity for external stakeholders to meet with senior policy makers, including the Governor, Deputy Governor and economists, to discuss economic issues and challenges facing Ireland in the near-to-medium term.

Governor Lane open the roundtable with a speech on “Macro-Financial Risk Management”, where he discussed current issues relating to macro-prudential policy and fiscal policy. The latter reflects the content of the pre-budget letter recently sent to the Minister for Finance.

The roundtable focused on three topics, chosen after consultation with participants. The three topics were: (i) Labour market conditions: indicators and implications; (ii) Resolving a non-performing loan crisis: the ongoing case of the Irish mortgage market; and (iii) Non-standard monetary policy in the euro area. Each session began with a short presentation on the topic, which are published below.

There was an open discussion on a range of issues including:

Labour market conditions: indicators and implications

  • To what extent compositional shifts are driving trends in average wages
  • Reasons for the low participation rate of certain groups in Ireland
  • Scarring effects of the crisis – is there an increased desire on the part of workers and employers for more stability and security
  • The role of non-labour income in overall income trends
  • Productivity trends and the composition of output

Resolving a non-performing loan crisis

  • The NPL situation has been significantly eased by a growing economy and widespread issuance of loan restructures
  • That consumer protection legislation still covers borrowers where NPL portfolios have been sold
  • Impact of NPLs on cost of funds
  • Low flow into arrears in 2016, but relatively high stock of NPLs remain
  • ‘Non-engaging’ borrowers account for a large share of deep-arrears
  • Which modifications work better than others

Non-standard monetary policy in the euro area

  • Impact of the low interest rate environment on cost of capital and productivity growth
  • Real effects of non-standard monetary policy (e.g. labour market)
  • The role of Quantative Easing in shifting expectations
  • QE and sovereign interest rates
  • Monetary policy and medium term goals

The Roundtable was attended by representatives from: The Nevin Economic Research Institute (NERI), Reuters, NAMA, RTÉ, AIB, Bank of Ireland, Deutsche Bank, KBC, KKR Credit Advisors, SIPTU, The Irish Financial Advisory Council (IFAC), academics from Maynooth University and Oxford/TCD, Ulster Bank, ESRI, Goldman Sachs and the Banking and Payments Federation Ireland (BPFI).

Presentation - Resolving a non-performing loan crisis

Presentation - Non-standard monetary policy in the euro area

Presentation - Labour market conditions indicators and implications