Opening Statement by Governor of Central Bank of Ireland Gabriel Makhlouf, at the Joint Oireachtas Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation, and Taoiseach

Cathaoirleach and Committee members, thank you for the invitation to be here today. I am joined by my colleagues Deputy Governor for Monetary and Financial Stability, Vasileios Madouros, and Colm Kincaid, Deputy Governor for Consumer and Investor Protection.

The Economic Outlook

Let me begin with the economic outlook.

The global economy continues to face challenges and heightened uncertainty from the Middle East conflict and the disruption in the Strait of Hormuz, with implications for energy prices and global supply chains.

For Ireland, Modified Domestic Demand growth is projected to moderate due to higher energy prices weighing on real incomes and consumer spending, though multinational-led AI-related investment will provide support. Inflation forecasts have been revised upwards to 3.5 per cent this year and 2.9 per cent in 2027, with the outlook for international energy prices substantially higher than assumed in our March Bulletin.

Events in the Middle East remain uncertain, not least when the disruption to the Strait of Hormuz shipping lanes is likely to be fully alleviated and the extent to which trade normalises.  Our Quarterly Bulletin presents scenarios ranging from swift resolution (lower inflation, stronger growth) to prolonged disruption (higher inflation, weaker growth).  Even in optimistic scenarios, inflation pressures persist.

More broadly, it is clear that we are living in a period where the frequency of large external shocks has increased.  Ireland and Europe’s policy frameworks – and the policy decisions themselves – have to adjust to this new reality so as to build long-term economic resilience in the economy. 

In my view, we need to prioritise and focus on a number of areas including: (1) growing the supply side of the economy, particularly housing, transport, energy and water infrastructure, (2) strengthening the indigenous business sector to complement foreign direct investment, (3) building fiscal buffers through prudent fiscal policy and rigorous expenditure control, (4) supporting household resilience by enabling greater retail participation in financial markets and improving access to debt and equity financing for domestic businesses and (5) working with partners to strengthen Europe’s economic infrastructure.  Given externally-driven price pressures and tighter monetary policy, I would also emphasise a broadly neutral fiscal stance is appropriate to avoid contributing to inflationary pressures.  

EU Prospectus Regulation

I would like to turn now to the issue of prospectuses.

I appreciate how important the Israeli Bond Programme has been to this Committee, and indeed the Irish public.

As I have said before, the Central Bank is an institution established by law, empowered by law, and must always act within and in line with the law.  We must carry out the statutory tasks and functions which have been assigned to us, in the manner they have been assigned to us.  This is integral to our role as a public institution, as an independent central bank in a modern economy, and for the rule of law in Ireland and the European Union.

The Central Bank has always sought to assist the Committee in its work on this issue. I have discussed it with Members on a number of occasions, and we have followed up with additional information in writing.  As with all of our work, I value our engagement with the Oireachtas, and we seek to provide as much assistance and information as possible, within our mandate and without breaching confidentiality obligations.

I want to repeat what I have said before to this Committee that I am appalled and saddened by the horrific loss of life and destruction we have seen in Gaza and the wider Middle East.  I speak for everyone at the Central Bank when I say that we want to see an end to hostilities by all parties.

But I have also set out the Central Bank’s role on the issue of prospectuses and how it is governed by EU law.

Our role is a very specific one, and it is governed by the EU Prospectus Regulation which is a disclosure regime. The role of the Central Bank is to ensure a prospectus has been drawn up in compliance with the disclosure requirements of the Prospectus Regulation. We are required to approve a prospectus if it meets the standards of completeness, comprehensibility and consistency imposed by the Regulation.

As such the Central Bank does not endorse the issuer or the securities by way of the prospectus approval, but rather confirms that it meets these required standards.

As I set out in my letter to you this week, due to professional secrecy obligations, we cannot provide details regarding our discussions with individual issuers, including the nature and timing of any requests. The Central Bank is subject to confidentiality obligations pursuant to the EU Prospectus Regulation and Section 33AK of the Central Bank Act 1942.  Again this is the law, and we must act within and in line with this law, though I understand that can be difficult and frustrating for the Committee in the current circumstances.

I note that there have been a number of statements that the Central Bank could refuse to approve a prospectus – or indeed its transfer to another competent authority for approval – on the basis of certain international law rulings and opinions, namely on the basis of the ICJ provisional rulings in the ongoing South Africa – Israel case and/or on the basis of the ICJ opinion on the Occupied Palestinian Territory. While these cases could lead to EU sanctions being imposed upon Israel, as matters stand there are no EU sanctions imposed upon Israel restricting its ability to issue securities, such as the sanctions that were imposed upon Russia following its invasion of Ukraine.

The Central Bank continues to keep under review its compliance with the applicable international, legal and regulatory frameworks in discharging its role in relation to  the Israeli bond prospectuses.

Fitness and Probity

Turning to Fitness and Probity, the Central Bank Reform Act 2010 introduced a statutory fitness and probity regime for regulated financial services. It was one of the key legislative reforms in financial services following the financial crisis. The regime protects the public interest by requiring that individuals in key positions in regulated firms are:

• Competent and capable,
• Honest, ethical, and act with integrity, and
• Financially sound.

Under the Act, individuals performing specified functions in regulated firms must comply with fitness and probity obligations on an ongoing basis and individuals performing senior roles must have the approval of the Central Bank before being appointed.  Last year, the Central Bank granted 2,684 such approvals and there are currently approximately 22,500 live approvals in our financial system.

The Act also provides that the Central Bank may carry out an investigation where there is reason to suspect an individual’s fitness and probity to perform a controlled function role. If, following an investigation, an individual is found to lack the required fitness and probity, the Central Bank may prohibit them for a specified time or indefinitely from performing certain roles in a regulated firm.  To date, the Central Bank has issued prohibition notices in thirteen cases.  Eleven of these prohibition notices were agreed with the relevant person and so did not require Court confirmation. Two were not agreed and therefore required application to the High Court for confirmation.

It is in this context that I wish to address a recent decision by the High Court not to confirm a prohibition notice imposed by the Central Bank. The decision followed the Central Bank imposing a prohibition on the individual concerned on 2 February 2022, for a period of 1 year (i.e. until February 2023).

As the prohibition was not agreed by the individual, the Central Bank applied to the High Court on 28 March 2022 to confirm the prohibition notice.  On 2 May 2025, the High Court notified the parties of its decision not to confirm the prohibition notice. The Court delivered its written judgment on 31 March 2026, which was published on 17 April 2026. The High Court found that the individual’s entitlement to natural and constitutional justice and basic fairness of procedures was not observed by the Central Bank in this case.

I acknowledge that investigations and prohibitions carry serious implications for individuals and take the High Court’s judgment very seriously.  We are in the process of mapping the judgment against our current procedures to make the necessary changes to incorporate its findings.  In fact we have already made a number of changes since the prohibition decision in February 2022. For example:

• The Central Bank (Individual Accountability Framework) Act 2023 amended the Central Bank Act 2010 to provide that a prohibition notice that has not been agreed by the individual does not now take effect until either agreed by the person under investigation or confirmed by the High Court. In other words, persons are no longer prohibited while the Court confirmation process is ongoing.
• In April 2023, following these amendments, we published revised regulations and guidance on fitness and probity investigations, suspensions and prohibitions. These have strengthened procedural safeguards for individuals subject to investigation.
• Prohibition decision-makers are now appointed by the Central Bank from a panel appointed by the Minister for Finance, to further safeguard their independence in making these decisions.
• In July 2024, the Central Bank published an independent review of the Fitness and Probity Regime undertaken by Mr Andrea Enria.  While the review focused on the gatekeeper pillar of the regime, the specific recommendations around fairness, efficiency and transparency of process have been adopted by the Central Bank into the broader operation of the regime, including the investigations pillar. For example, at the earliest point in the investigation process, individuals are provided with an overview of the end-to-end process and kept up to date on the progress of the investigation through regular engagement.

Separately, earlier this year we concluded a public consultation on guidance to provide further clarity and transparency on our approach to prohibition decisions. We aim to publish this guidance later this year.

The Central Bank is committed to implementing the statutory regime for fitness and probity in financial services.  We will continue to look to improve how we do so, including implementing fully the findings of the recent High Court judgment.

Conclusion

My colleagues and I are happy to take your questions.