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Governor of the Central Bank of Ireland Gabriel Makhlouf highlighted the risks (Niall Carson\/PA)<\/p>\nIreland\u2019s economic resilience cannot be taken for granted as global risks intensify, the governor of the Central Bank of Ireland has said.<\/p>\n
External risks have \u201cintensified\u201d since last year, Gabriel Makhlouf said, as he launched the bank\u2019s Financial Stability Review.<\/p>\n
The review looks at the threats to and resilience of the Irish financial system and outlined a number of challenges the country is facing; including uncertainty caused by the conflict in the Middle East, the use of private credit markets to fund AI and potential cyber attacks.<\/p>\n
Makhlouf stressed the economy in Ireland is \u201cstarting from a pretty resilient position\u201d but warned: \u201cYou can\u2019t take that resilience for granted, you can\u2019t assume that because we\u2019re resilience today, we\u2019re going to be resilient forever.<\/p>\n
\u201cYou have to take certain actions and you are dependent on external events, of which you have zero control, but you can plan to build resilience, the buffers, to manage the realisation of those risks.\u201d<\/p>\n
The war in the Middle East and the resulting energy crisis will have implications for growth, financial conditions and critical global supply chains if it is unresolved, the review said.<\/p>\n
The International Monetary Fund had modelled several scenarios about the impact the conflict would have on growth and inflation varying on how long or severe it might become.<\/p>\n
Mark Cassidy, the director of financial stability at the bank, said: \u201cWe are already closer to their adverse scenario than to their baseline in many respects, and the longer that the conflict lasts, the greater the longer term disruption.\u201d<\/p>\n
Governor of the Central Bank of Ireland Gabriel Makhlouf highlighted the risks (Niall Carson\/PA)<\/p>\n
Global energy markets are getting closer to a \u201ctipping point\u201d he said, after which economic effects can become increasingly disproportionate and can have accelerating effects.<\/p>\n
The outbreak of the conflict came at a time when risks and vulnerabilities in financial markets had already been \u201cbuilding\u201d, Cassidy added.<\/p>\n
A number of risks associated with Artificial Intelligence (AI) were also outlined in the review.<\/p>\n
High valuations for AI-related stocks because of strong reported earnings have the potential for a \u201cmarket correction or sector level disruption\u201d if the global financial outlook worsen or if earnings from those stocks are disappointing, Makhlouf said.<\/p>\n
The Governor also described how the use of private credit, where finance is provided outside \u201ctraditional channels\u201d, to fund software and AI companies is also a concern, and described these markets as \u201copaque\u201d.<\/p>\n
Cassidy said: \u201cWe have already seen evidence of poor underwriting in risky markets that has led to corporate defaults.<\/p>\n
\u201cThere\u2019s also growing evidence now of increased redemption requests, and investors trying to reduce their exposures to private credit amid quite a sharp drop in investor sentiment.\u201d<\/p>\n
The increasing geopolitical tensions combined with rapid development of AI has also meant an increased concern about the threat of cyberattacks.<\/p>\n
He said cutting edge AI models that are able to \u201cidentify and to exploit system vulnerabilities\u201d have underlined \u201cthe importance of bolstering operational resilience capabilities of the financial system in order to reduce the risk of a disruption to core financial services.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Ireland\u2019s economic resilience cannot be taken for granted as global risks intensify, the governor of the Central Bank…\n","protected":false},"author":2,"featured_media":470004,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,61,60],"class_list":["post-470003","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/470003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=470003"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/470003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/470004"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=470003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=470003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=470003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}