CBI Letter to Minister for Finance: Financial Regulation Priorities 2023

Introduction

The priorities relate mainly to Banks, Funds, Financial Firms, Non-Banks, Payment and E-Money institutions, Credit Unions, and Crypto Assets markets.

As stated by the CBI, the outlook for the year ahead remains clouded by uncertainty and challenges continue in the macro-financial environment, with the sharp and persistent increase in inflation leading to shocks on people’s real income and erosion of living standards. It is believed that global markets will remain vulnerable to further shocks, especially those to asset prices. The potential vulnerabilities spread across different parts of the global financial system, including non-bank financial systems where leverage or liquidity mismatches tend to be higher. Nonetheless, Ireland remains a global financial centre that has seen evident growth.

The Central Bank’s focus continues to be on ensuring that the financial system and firms operate in a way where the interests of consumers and users are protected and supported. The priorities for financial regulation for 2023 involve constant engagement with the Department of Finance on common interests and the assurance that the regulation continues to be forward-looking, connected, proportionate, predictable, transparent and agile.

Engagement with the Department of Finance

There are numerous areas where the Central bank and Department of Finance will continue to engage.

As the financial system continues to change, there will be a need for financial literacy and education to continue to support consumers. The engagement with the Department of Finance will also help to ensure the effectiveness of Ireland’s approach to the EU’s sanctions regime.

Priorities for financial regulation for 2023

The priorities formulated by the Central Bank will help to support its strategic objectives and the need to respond to the dynamic and growing financial services system in Ireland.

These priorities are listed below:

The 2023 supervisory priorities share common ground with the ones of last year regarding consumer protection, innovation, climate change, and PSD2, and while the previous priorities focused mainly on the banking sector, the ones for this year spread across different sectors of the financial system, focusing on banking and non-banking sectors.

With the development of these priorities, the Central Bank aims to guide financial firms, consumers, and investors, in navigating the challenges arising from the current dynamic financial services system. The priorities include the assessment and management of financial and operational resilience risks to ensure fair outcomes for consumers and investors, and continuing to detect and section market abuse. Although these priorities are in line with the Central Bank’s strategic objective, it is yet to see how they will unfold throughout the year given the current financial landscape

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