Irish seeks to activate systemic risk buffer for banks – UK Money News


DUBLIN, April 16 (Reuters) – Ireland’s Central Bank has
requested from government the power to activate the so-called
systemic risk buffer that would impose additional capital
requirements on banks to further protect the economy, Governor
Philip Lane said on Tuesday.

Systemic risk buffers have been applied in some other
European Union economies and Lane said, for Ireland, the aim
would be to add resilience against tail risks, economic shocks
that are unlikely to occur but that would have a significant
impact on the economy and financial system if they did.

He said the main such risk facing Ireland – leaving aside
Brexit – is its high dependence on multinational firms and that
“if there were a persistent shock to that sector, the cumulative
decline in economic activity would dwarf a normal cyclical

The calibration and timing of the systemic risk buffer – if
activated – will be based on a thorough evidence-based
assessment, Lane added, indicating that it will be left for his
successor when he leaves to become the European Central Bank’s
chief economist in June.
(Reporting by Padraic Halpin; writing by Kate Holton; editing
by Stephen Addison)

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