He said that because the work that the Central Bank and others have undertaken, the immediate cliff-edge risks of a hard Brexit have been largely addressed. These include the temporary permission by the European authorities for the UK central securities depository (CSD) to continue to serve Irish securities during the transition to an alternative EU27 CSD arrangement and legislation to provide a temporary run-off regime that will protect insurance customers.
“In terms of financial stability risks, our assessment is that the improvements in the resilience of the financial system over the last decade provide a vitally-important buffer. Taken together, the more balanced macroeconomic profile, the restructuring of the Irish banking system, the much-higher capital and liquidity ratios, the decline in the non-performing loan ratio and the more intrusive supervisory regime mean that the capacity to absorb negative shocks is much greater than in the past”, he added.
On the overall economic impacts of Brexit he said, “a sudden, no-deal scenario would have immediate disruptive effects that would permeate almost all areas of economic activity. The agri-food sector would be disproportionately affected, with a corresponding outsized impact on rural regions, especially near the Border. Our modelling work suggest that a disorderly Brexit could reduce the growth rate of the Irish economy by up to four percentage points in the first year.”
12th February 2019:
Earlier this week, Eurozone Finance Ministers gave their support to the candidacy of Central Bank Governor, Philip Lane, to become a new member of the European Central Bank's executive board. He is expected to be confirmed by the ECB as Chief Economist of the European Central Bank in that role. The recommendation to the European Council - composed of the heads of state and government - is expected to be formally adopted by the Council. On this basis, the European Council will consult both the European Parliament and the Governing Council of the ECB. It is then expected to adopt its final decision at its meeting of 22-23 March.
Governor Lane will replace Peter Praet and will serve a non-renewable eight-year term, as of 1st June 2019. The ECB executive board is responsible for implementation of euro area monetary policy, and Governor Lane's nomination got the unanimous backing of Euro-area finance ministers. The governing council is composed of the six executive board members and the governors of the national central banks of the euro area member states.
A key part of that job is preparing the ECB's monetary policy decisions - notably the setting of the ECB's interest rates.
Previously Governor Lane was the chair of the ECB's scientific advisory board, responsible for briefing the ECB on leading edge economic theory, on the recommendation of Governor Mario Draghi, and prior to his appointment to the CBI was a widely published economist in the Trinity College Dublin Economics department.
He was speaking at the European Financial Forum on February 13th in Dublin Castle, presented by the Financial Times in partnership with IDA Ireland.