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    Irish Central Bank Assesses Financial Stability, Retains CCyB at 0%

    December 16, 2021

    The Central Bank of Ireland published the second Financial Stability Review of 2021, which assess the resilience of financial system in the country and outlines key risks facing the financial system. The review finds that, while uncertainty around the path of the pandemic remains, the economic recovery has continued over the past six months, reducing some of the near-term macro-financial risks. The Central Bank also presents the latest review of the macro-prudential policy tools and announces that the countercyclical capital buffer (CCyB) remains at 0%. However, if the economic recovery is not materially disrupted by the resurgence of the virus, the Central Bank of Ireland expects to announce a gradual rebuilding of macro-prudential capital buffers during 2022, to safeguard resilience against future risks.

    Post an annual review of the mortgage measures, the Central Bank has decided that the calibration of the mortgage measures will remain unchanged, in light of the ongoing framework review. However, a number of operational changes will be implemented. A “carry-over” system will be introduced for managing allowances. This will permit lenders to carry over any unused allowance share for use in the first half of 2022, on the provision that those loans were approved in 2021. The measures will be amended to clarify the ability of retail banks to participate in the “First Home” shared equity scheme. However, the wider framework review of the mortgage measures is ongoing, with extensive analysis and stakeholder engagement. The review has been informed by an online survey. As part of the process, a public consultation was launched in December, with the comment period on the consultation open until March 16, 2022. The Central Bank of Ireland expects to complete the framework review during the second half of 2022. 

    The Central Bank of Ireland also launched a consultation on a set of measures to limit leverage and liquidity mismatches for property funds. The proposed limit would be imposed through existing regulation under the Irish transposition of the Alternative Investment Fund Managers’ Directive. The regulator proposes to introduce additional guidance for property funds on aligning their redemption terms with the liquidity of their assets. The feedback period on these proposals ends on February 01, 2022.

     

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    Comment Due Date: March 16, 2022 (Mortgage Measures)/February 01, 2022 (Macro-Prudential Measures)

    Keywords: Europe, Ireland, Banking, Financial Stability Review, CCYB, Regulatory Capital, Lending, Credit Risk, CRE, Macro Prudential Policy, Central Bank of Ireland

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