The Central Bank of Ireland published the annual report, which focuses on the key activities and work undertaken in 2021 and sets out the strategic priorities for coming months. In addition, the Central Bank of Ireland published a call for interest in membership of the Climate Risk and Sustainable Finance Forum, which was open for applications until May 20, 2022.
Annual report for 2021
The key strategic priorities provided in the report involve focusing on the resilience of the financial system, enhancing the regulatory and supervisory framework, enhancing the governance of financial services firms, and supporting the transition to a carbon-neutral economy. The key planned activities under these priorities include the following:
- Complete the review of the macro-prudential mortgage measures, assessing the need to adapt them in light of experience and the prevailing housing context including supply, finance, and affordability.
- Contribute to the European review of capital buffers for banks, including ensuring their usability in times of crisis and at domestic level, and conclude the macro-prudential capital framework review.
- Maintain focus on the financial and operational resilience of the financial sector through stress testing and other financial resilience-related work across multiple sectors and supervision of business model and technology-related change.
- Continue to strengthen crisis management capabilities and continue to progress the resolvability of financial services firms, engaging with the Department of Finance in relation to the remaining gaps in the legislative framework.
- Continue to prioritize authorization work across multiple sectors, recognizing the benefits of innovation, disruption, and competition, but also the importance of protecting consumers of financial services
- Review the functioning of the Innovation Hub to support engagement between the Central Bank and innovators.
- Work to evolve the regulatory framework to reflect advances in crypto technology and distributed finance. The Central Bank will continue to support the Department of Finance in finalizing negotiations on the Markets in Crypto Assets Regulation Proposal and the Digital Operational Resilience Act and will prepare for their implementation in Ireland.
- Continue to adapt supervision to ensure that financial firms are adapting business models and building resilience in the face of growing climate and transition risks, along with focusing on the development and marketing of green financial services products and services such that they are meeting high standards of quality and disclosure.
- Learning from, contributing to. and applying international best practices and the development of relevant regulation and guidelines through participation in the Network for the Greening of the Financial System and work in the European Supervisory Authorities.
Climate Risk and Sustainable Finance Forum
In addition, the Central Bank announced that it was seeking applications for the membership interest in the Climate Risk and Sustainable Finance Forum. In November 2021, the Central Bank had announced its intention to establish the Forum, which will be a consultative forum for cross-sectoral discussions among representative bodies, financial sector participants, climate change experts, and the Central Bank. The Forum's overall purpose is to build a shared approach to the understanding and management of the financial risks and opportunities posed by climate change. To this end, working groups will be established within the Forum to develop industry-specific best practice documents. The Climate Risk and Sustainable Finance Forum proposes to address the following broad topics:
- Build a shared knowledge and understanding of the implications of climate change for the Irish economy and financial system
- Build a shared understanding of data gaps and how to address them
- Share or publish best practice on climate-risk assessment and modeling
- Share or publish examples of good practice on embedding climate-related risk assessment and sustainable finance considerations within firms’ operations
Keywords: Europe, Ireland, Banking, Climate Change Risk, ESG, Regtech, Regulatory Capital, Basel, Sustainable Finance, Work Priorities, Central Bank of Ireland
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.