The Central Bank has published its new Strategy, with Central Bank Governor Gabriel Makhlouf noting that the Central Bank is at a “watershed moment” in its development.
The new Strategy is built on four key pillars (future focused; transforming, safeguarding; open and engaged). In formulating the Strategy, the Central Bank looked at the key drivers of change in the financial system, including the pace of technological innovation, the need to mitigate the long-term impacts of climate change, geo-political change, the long-term consequences of the COVID-19 pandemic, and the need to address risks relating to money laundering, financial crime and cyber security.
In recent months, the Central Bank has repeatedly signalled in the importance that it places on the following as part of its supervisory agenda, so their inclusion as key aims in its new Strategy was expected:
- Anticipating and supporting technological innovation in financial services.
- Strengthening the resilience of the financial system to climate-related risks, and supporting the transition to a low-carbon economy. The Central Bank outlined its supervisory expectations regarding climate change last week (read our briefing here) and was a party to the Glasgow Declaration by the Network for Greening the Financial System last week at COP26.
- Increasing the choice of, and access to, payment instruments in Ireland.
- Reviewing and developing the macro-prudential framework for banks, borrowers and non-banks. As part of this, the Central Bank is reviewing its mortgage measures, and we may see changes to those in 2022. Central Bank Deputy Governor, Sharon Donnery’s recent speech on Macroprudential Policy in the Irish Mortgage Market: Taking Stock is a useful reminder of the Central Bank’s ongoing work in this area (in 2021 and 2022) across the three areas of mortgage measures, bank capital, and market-based finance.
- the interests of consumers (a consultation on revisions to the Consumer Protection Code is expected shortly)
- culture and conduct (read our recent briefings on the proposed individual accountability framework, and senior executive accountability regime, here on our website: Financial Regulation: Individual Accountability and SEAR)
- financial and operational resilience
- AML/CFT (read our recent updates on MLD5 transposition, and EU-level plans in this area, here: Arthur Cox Q&A: MLD5 Transposition and AML Horizon-Scanning, AML Update: Express Trusts and Beneficial Ownership – Welcome Clarity, AML Update: Crypto-Assets – VASPs must register with Central Bank and AML: EU-level supervision and a single rulebook by the end of 2025)
- Continuing to strengthen its crisis management capability, and ensuring that regulated firms move towards resolvability.
As always, we continue to monitor regulatory priorities and trends on behalf of our clients. Please get in touch with any member of our Financial Regulation or Financial Regulation: Investigation and Enforcement teams if you would like further information.
The next decade will continue to be characterised by rapid change in our economies and in the financial system, driven by technology, by an ageing society, by the need to respond to climate change, and, perhaps most immediately, by the move to different ways of working.