Statement by the Governor of the Central Bank of Ireland, Gabriel Makhlouf

Yesterday, the ECB’s Governing Council announced a series of measures aimed at supporting households and firms through the significant uncertainty and disruption caused to the euro area economy by the COVID-19 virus. These measures will support the smooth provision of credit to households and businesses and include further operations to support bank lending.

The spread of COVID-19 is a major shock to growth prospects across the globe. It is clear that the pandemic is disrupting economic activity, both internationally and in Ireland, with adverse implications for the financial position of households, businesses and the financial system in the near term. The necessary containment measures on public health grounds will have a significant impact on the euro area and Irish economies, in particular on tourism, transport and recreational services.

The Governing Council believes that an ambitious and co-ordinated fiscal policy response is required to mitigate the economic impact of the virus and support workers and businesses. Fiscal measures, such as those announced recently by the Irish Government, are the primary policy tool to deal with this type of shock.

The Governing Council’s monetary policy measures will support a fiscal policy response, as will the decisions also made yesterday by the ECB’s Supervisory Board to enable banks to fully use capital and liquidity buffers and so continue supporting households and businesses.

The Central Bank of Ireland expects banks to use the positive effects of these measures to support the economy and not increase dividend distributions or variable remunerations.

We continue to monitor the evolving situation and to assess the impact on the economy and the financial system. Our focus is on ensuring monetary and financial stability and that the financial system operates in the best interests of consumers and the wider economy. We are engaged with the financial sector to ensure that firms are responding effectively to the evolving situation.

We acknowledge the exceptional efforts of Ireland’s health professionals in dealing with a major global public health emergency.