Building economic resilience is not optional - Central Bank of Ireland Governor Gabriel Makhlouf

The Central Bank of Ireland has set out its regulatory and supervisory priorities for 2026 and provided detailed advice to Government on building economic resilience in the face of unprecedented uncertainty.  

In his letter to the Tánaiste and Minister for Finance Simon Harris, Governor Gabriel Makhlouf set out his views on the macro-financial environment, the financial services landscape and the Central Bank of Ireland’s financial regulation priorities for the year ahead.

Governor Makhlouf emphasised that Ireland's economy and financial sector, while starting from a strong position, must adapt to a rapidly changing international environment characterised by geopolitical tensions, trade fragmentation, technological disruption and climate transition.

Building economic resilience domestically

The Governor has advised Government to focus on building economic resilience and to prioritise five key areas:

• Growing the supply-side capacity of the economy, particularly through delivering necessary infrastructure in housing, transport, energy and water
• Strengthening the indigenous business sector to complement foreign direct investment and enhance economic resilience
• Building fiscal buffers through prudent fiscal policy and rigorous expenditure control
• Supporting household resilience by enabling greater retail participation in financial markets and improving access to debt and equity financing for domestic businesses
• Working with partners to strengthen Europe’s economic infrastructure, and working with others to develop a new set of multilateral trading rules that deliver certainty and stability.

Governor Makhlouf said: "The overarching context that our small open economy and large international financial sector are operating in is particularly challenging. The implications of the ongoing transition of the international order and global trade environment are yet to be fully borne out, and indeed this transition has potentially accelerated in recent weeks.  We must continue to ensure that our economy, our public finances and our financial sector remains resilient and adapts to these risks.”

Regulatory priorities

Governor Makhlouf said that regulatory policy also needs to continue to promote resilience, and the Central Bank has identified four overarching supervisory priorities for 2026:

• Maintaining and building resilience to geopolitical risks and macro-financial uncertainties – including strengthening the financial sector's operational and financial resilience
• Securing consumer and investor interests in a rapidly changing world – including implementing the revised Consumer Protection Code and enhancing safeguards against financial crime
• Responding to technology-driven transformations – including continued focus on artificial intelligence in the financial sector and delivering the second Innovation Sandbox programme on payments
• Helping to address environmental and societal transitions – including assessing firms' responses to climate-related risks and the increasing frequency of severe weather events.

The Central Bank will also deliver new responsibilities under Access to Cash legislation and continue its work on innovation, including a forthcoming Discussion Paper on tokenisation.

Europe must act on its strengths

In remarks to EU Heads of Missions today, Governor Makhlouf said the seismic structural shifts underway are a huge moment for Europe, but we must not forget the success, peace and prosperity it has brought.

“In this vein, while the focus can often be on Europe’s weakness – and we are undoubtedly facing many challenges – I firmly believe that Europe should act on the basis of its strengths and its potential,” said Governor Makhlouf. “Most of all, we should channel our energies into those areas that pay the biggest dividends.”

The Governor identified three priority areas for Europe:

• Trade – both completing the internal single market (which faces internal barriers equivalent to a 45 per cent tariff on goods and 110 per cent on services) and maintaining openness to external trade partnerships.
• Deepening the Savings and Investment Union – prioritising the expansion of European safe assets, mobilising internal capital through greater retail investment participation, and increasing the attractiveness of European markets to external capital, rather than focusing primarily on supervisory centralisation.
• Productivity – focusing on adapting to the economy of the future through greater technology development and adoption, accelerating decarbonisation, and closing Europe's innovation gap.

Concluding, Governor Makhlouf said that a changing world will require central banks to also change, adding: “But it also includes institutional resilience which means adapting and responding to change, while also staying firm and resolutely focused on delivering on our important mandates regardless of the external winds and headwinds. This is why, particularly in these testing times, central banks remain fundamental to ensuring monetary and financial stability, and delivering long term stable growth.”

The Central Bank will publish its full Regulatory and Supervisory Priorities document in the coming weeks.

ENDS

Further Information

Martin Grant: 086 078 7868 / [email protected]