Better decisions, better regulation, better outcomes

Good regulation matters. It matters for consumers and for investors. It matters for firms and the wider economy, and for resilience and the stability of the financial system.

In the Central Bank, regulation is central to how we deliver our safeguarding outcomes: protecting consumers and investors, maintaining financial stability, supporting the safety and soundness of firms, and protecting the integrity of the financial system.

As I have said before, good regulation should be forward looking, connected, proportionate, predictable, transparent and agile.

While all are important principles underpinning our current approach, in the current environment I would emphasise that regulation and regulators can’t stand still.

As markets evolve, technology advances, business models change, and consumer expectations transform, regulation needs to continue to evolve to promote resilience, to keep pace with rapid innovation in finance, while supporting financial markets to work effectively for consumers, investors and the wider economy.

Regulators must adapt too. As the environment becomes more complex and the choices facing policymakers become more difficult and the quality of decision-making becomes increasingly important, it is essential that we evolve how we develop policy and how we make decisions.

Our Strategy set out to transform regulation and supervision.

Last year, we introduced our new supervisory approach and in December we set out our ambition to deliver a more effective and efficient regulatory framework, including a comprehensive roadmap of initiatives across the breadth of our regulatory and supervisory work.

And today, as part of that ambition, we have launched a consultation seeking views on our approach to Regulatory Impact Assessment, and our approach to consultation with stakeholders.

The consultation represents another milestone in delivering our ambitions and reflects our commitment to continuous improvement in how we develop, assess and implement regulatory policy. It is central to our  work on making regulation clearer, more coherent and easier to navigate, while maintaining the protections and resilience that the financial system depends on. That work is not about lowering standards or weakening resilience. It is about ensuring that regulation remains effective, proportionate and responsive as circumstances evolve.

By outlining our proposed approach to Regulatory Impact Assessment, we are taking the next step in strengthening how we develop, assess and review policy interventions across the financial system.

Evidence, analysis and decision making

Evidence, analysis, engagement and judgement are central to how we develop policy at the Central Bank of Ireland.  This has always been the case and is reflected in the important policy decisions we have made.

The aim of the proposals being announced today is to better – and more fully – deliver on this approach to policy, making it more consistent, more transparent and more firmly embedded across the organisation and throughout the policy lifecycle.

Good policymaking depends not only on the decisions that are ultimately reached, but also on the process through which those decisions are made. That means being clear about the problem we are trying to solve and about the outcomes we are seeking to achieve. It means considering alternative approaches and challenging our own assumptions.

At its core, good policymaking is about combining evidence, analysis, experience and judgement. And it requires an assessment of likely impacts, including costs, benefits, risks and unintended consequences.

No single source of information is sufficient on its own.

Research helps us understand emerging trends and risks.

Data helps us understand how markets, firms and consumers behave.

Supervisory experience helps us understand how regulation operates in practice.

And engagement with stakeholders helps us understand perspectives and consequences that may not otherwise be visible.

Bringing these insights together is not always straightforward. But doing so is essential to support the judgement of policymakers in making decisions that are effective, proportionate and deliver the outcomes they are intended to achieve.

By bringing together evidence, analysis and stakeholder perspectives in a structured and proportionate way, Regulatory Impact Assessment supports good policymaking, helping to ensure that decisions are informed by the best available information. Better-informed decisions are more likely to deliver the outcomes we are seeking to achieve And it matters because regulatory decisions have real-world consequences,  affecting consumers and investors, firms and markets and  the ability of the financial system to support the wider economy.

Learning and improving

The proposals we are consulting on also reflect a broader principle. Effective institutions should be learning institutions.

They should be willing to challenge themselves, review their approaches and adapt as circumstances evolve. For regulators, good policymaking does not end when a decision is made. How and when policy is implemented, and the outcomes achieved, matter.

This is why assessment, consultation, implementation and review should all be viewed as part of a continuous process of learning and improvement.

The objective is not better process but better decisions leading to better regulation.

Better regulation, in turn, leads to better outcomes for consumers, investors, firms and society as a whole. That is the objective that sits behind the consultation we have launched today.

I encourage everyone with an interest in these issues to engage with them and help us strengthen the way we develop, assess and review policy interventions in the years ahead.