“We must look beyond the pandemic to improve our understanding of longer term risks” - Governor Gabriel Makhlouf

• While we must weather the lockdown – and subdued output – for another while yet, come the second half of the year, assuming a successful deployment of the vaccine, the economy should begin to recover
• The broad mandate of the Central Bank is a real strength as it allows us to take a comprehensive view and tackle challenges across the entire system
• Better engagement with our stakeholders across the community in Ireland helps us understand the issues faced by the businesses and households in the economy and the risks posed by – and to – the financial system

The Governor of the Central Bank of Ireland Gabriel Makhlouf met (virtually) with staff and students from the University of Limerick as well as representatives from local businesses today as part of the Central Bank’s outreach programme. Speaking at the event the Governor focused on three themes: the economic outlook for the Irish economy for the year ahead, the priorities for the Central Bank of Ireland for 2021 and how the Central Bank engages with key stakeholders in the community.

On the economic outlook Governor Makhlouf referenced the Central Bank’s recent Quarterly Bulletin publication and said “Evidence from consumer behaviour points to a potential surge in demand in the second half of the year.” He added that “Supported by strong government income support measures, we forecast modified domestic demand to increase by 2.9 per cent this year, following an estimated decline of around 7.1 per cent in 2020.” However he cautioned that this remains contingent on key assumptions regarding Covid-19 developments.

Outlining the priorities for the Central Bank for the year ahead the Governor said “The welfare of the people as a whole has always been at the core of our work.” Noting that “Our broad mandate allows us to take a comprehensive view and tackle challenges across the entire system, including as an integral part of the European Union and its institutions and frameworks.”

Looking ahead Governor Makhlouf said that “All of our work will of course be dominated by our ongoing focus on the pandemic. We will continue to deepen our understanding of its impacts and take any necessary steps to enable the financial system to support the recovery.” He said that “last March’s significant market turmoil illustrated vulnerabilities in parts of the non-bank sector that regulators throughout the world want to address. We have already advanced significant supervisory interventions to require the regulated sector here in Ireland, in particular investment funds, to take steps to enhance their resilience. In 2021, we will continue to work with our European and international partners on the development of a comprehensive and proactive macroprudential framework for the non-bank sector.”

Strengthening the approach to protecting consumers will remain a key priority and focus of the Central Bank’s work for 2021, including developing and enhancing the regulatory framework and our supervisory approaches. This will include a review of the Consumer Protection Code, the adoption of a customer-focused approach by firms to the resolution of business interruption issues arising from Covid-19 and steps to address the practice of price differentiation in the Irish insurance market.

The Governor outlined plans to build further on engagement with stakeholders and users of financial services through the Central Bank’s Civil Society Roundtable and Consumer Advisory Group “to enhance our mutual understanding of cross-sector issues in the area of financial regulation.” He said that “In addition to our regular engagement - not least on distressed debt - a focus of our outreach this year will be to hear views on the impact of the ECB’s monetary policy and communication and on the global challenges ahead.”

Governor Makhlouf concluded by stating “Economic resilience is in essence the ability of an economy to manage change, whether it is to withstand or recover from the effects of shocks or the more gradual evolution to a different state ... Of course, to understand how to build economic resilience, we need good evidence and to develop the frameworks that enable the analysis to be turned into policy actions that deliver successfully. And to do that, we need to listen, learn, exchange information and ideas, gain knowledge and insights from different experiences and disciplines.”

Notes

Earlier today, the Governor published a blog post entitled 2020 – a year to remember a year to forget discussing some of the key economic trends that emerged over the last year.

Over the last 12 months, the Central Bank’s outreach programme has included a series of webinars with representatives from Cork, Clare, Louth and Galway Chambers of Commerce as well as a visit to Tralee and Killorglin, Co. Kerry.

The purpose of these roundtables is to communicate with our stakeholders, to build awareness of our mandate, to initiate discussion and to engage in a two-way exchange of views and information.

The role of the Consumer Advisory Group ('CAG') is to advise the Central Bank on the performance of its functions and the exercise of its powers in relation to consumers of financial services including: the effects of the Central Bank's Strategic Plans on consumers of financial services; initiatives aimed at further enhancing the protection of consumers of financial services; and if the Central Bank so requests, documents, consultation papers or other materials prepared by the Central Bank.