“Economic resilience needed to meet transitions ahead” – Governor Makhlouf

20 November 2019 Press Release

Central Bank of Ireland

  • We must constantly challenge ourselves and our thinking
  • Resilience of market-based finance internationally remains untested in times of stress
  • Important to review scope of macroprudential framework to ensure it is fit for purpose

In his first keynote speech since being appointed Governor of the Central Bank of Ireland, Gabriel Makhlouf set out the key challenges, risks and transitions which Ireland faces.

Speaking to students and staff at the Waterford Institute of Technology, and the Chamber of Commerce, Governor Makhlouf highlighted the vulnerability of the Irish economy, particularly in the context of Brexit and the risk of escalating trade wars.

He said: “Building economic resilience is not like building a bulwark and then assuming the job is done. There is no one-off solution to the challenge of building resilience. It is a continuous process, involving individuals, households, businesses, institutions and authorities, such as the Central Bank, both at home and abroad.”

While acknowledging the substantial improvements in resilience made over the last decade, citing reductions in public and private sector indebtedness, he identified four key transitions which pose challenges to the Irish people:

  • Brexit
  • Climate change
  • The pace of technological change
  • Profound changes which are taking place in the financial system.

He highlighted that given Ireland’s international interconnectedness, building resilience through these transitions is essential: “for me it is about continuing to focus on the fundamentals, about managing the short-term while planning for the medium term. It is about ensuring our frameworks are fit-for-purpose and learning the lessons of the past while preparing for the future.  It is also about being prepared to challenge ourselves.”

He noted that the mortgage measures are a permanent feature of the mortgage market and have been key to enabling sustainable lending. He added, “it is important to take stock, learn lessons and continue to develop.  In particular it is important to consider how the suite of macroprudential buffers interact not only with each other but also with those of microprudential supervision – arriving at a consistent and holistic view of capital for the banking sector – and the other key macroprudential tools in operation. We must continue to look at whether the objectives and scope of our wider macroprudential framework remains appropriate to the current environment.”

 “Given the growth in market-based finance in recent years, there is growing focus on understanding the financial stability risks posed by these developments. This is particularly important given the ‘lower for longer’ monetary policy environment we find ourselves in. It is important for our macroprudential framework to grow and widen to reflect these developments with policies to promote financial stability and to mitigate the impact of negative shocks on the real economy.”


  • Governor Gabriel Makhlouf and Director General, Financial Conduct, Derville Rowland will visit secondary schools during their visit to Waterford. Governor Makhlouf will visit St. Paul’s Community College and Derville Rowland will visit St. Angela’s College.

Macroprudential policy

  • The Central Bank uses macroprudential policies to promote financial stability in Ireland and to mitigate the impact of negative shocks on the real economy. There are two facets to the goal of macroprudential policy: first, to make the domestic banking system more resilient so that it can better withstand adverse shocks and continue to provide financial services to the real economy; and, secondly, to try to reduce the emergence of imbalances or vulnerabilities in the domestic financial system.
  • The Central Bank has a range of macroprudential policy tools at its disposal to help it address these objectives and has introduced a number of these over the last number of years, focussed primarily at the banking sector.
  • Examples of the macro-prudential policy tools which the Central Bank has available to it include: