Central Bank of Ireland Reports Results of Financial Stability Review
The Central Bank of Ireland published its report on the results of the second financial stability review of 2019. The report outlines key risks facing the financial system and the central bank assessment of the resilience of the economy and financial system to adverse shocks. Additionally, the Central Bank of Ireland published four Financial Stability Notes assessing the mortgage market and the functioning of the macro-prudential mortgage measures. These measures set limits on the size of mortgages that consumers can borrow through the use of loan-to-value and loan-to-income limits. Also published was a Financial Stability Note on mapping the market-based finance in Ireland.
The financial stability review indicates that as a small and open economy, Ireland remains vulnerable to shocks arising abroad. The possibility of a disorderly Brexit, changes to global tax policy, and a sudden change to global financial conditions are all ongoing risks to financial stability in Ireland. While the further fall in global interest rates mitigates near-term debt sustainability concerns, this can build vulnerabilities in the medium term. Domestically, an economy close to capacity and continued lending growth points to a gradual build-up of cyclical systemic risk. Overall, the banking system is now better able to absorb shocks, but profitability challenges have become more acute. The review also highlights that the countercyclical capital buffer rate has been retained at 1%. The Governor also announced an annual review of the other systemically important institutions framework, under which the six systemically important institutions have buffer rates of between 0.5% and 1.5%.
The Central Bank of Ireland released the following Financial Stability Notes:
- The financial stability note related to default by buyers highlights that there continues to be a lower likelihood of default for first time buyers compared with second and subsequent buyers.
- The note on mortgage servicing burdens and loan-to-income caps explores the relationship between monthly mortgage repayments and disposable income of borrowers in the context of the mortgage measures. The paper finds that the average household drawing down a mortgage in 2019 is spending almost one quarter of its net monthly income on mortgage repayments.
- Another financial stability note provides a measure of bindingness in the Irish mortgage market by combining estimates of credit available and take-up for individual Irish borrowers.
- The note titled "Mortgage borrowers at the loan to income limit” highlights that lenders respond to macro-prudential mortgage measures in the country by reducing lending and leverage to households seeking high loan-to-income ratios.
- The note on mapping market-based finance in Ireland explores growth in the market-based finance sector over the last decade, the composition of the sector domiciled in Ireland, and the benefits and vulnerabilities associated with this form of financial intermediation.
Related Links
- Press Release on Financial Stability Review
- Financial Stability Review (PDF)
- Press Release on Notes on Mortgage Market
- Press Release on Note on Mapping Market-Based Finance
Keywords: Europe, Ireland, Banking, Securities, Insurance, Brexit, Macro-Prudential Policy, CCyB, Systemic Risk, Financial Stability Review, Market-Based Finance, Central Bank of Ireland
Featured Experts

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.