Mr. Mario Draghi:

One thing to keep in mind is that we are not party to the Brexit negotiation. This does not mean that we are not monitoring what is happening. We support the Commission with technical advice in our remit. As the Senator may know, upon the joint initiative of the European Commission and the UK Treasury, a working group between the Bank of England and the ECB is being created. We have been told that we cannot overstep the main negotiators. The working group has identified various areas but has not yet proceeded or been instructed to exactly explain what ought to be done.

The impact on the Irish economy is both direct, through trade, and indirect, through financial channels. It is direct in that the banks and all the financial systems are highly interconnected with the UK financial system. It is also indirect in the sense that the Irish financial and banking system finances firms that also operate in the United Kingdom. The impact is bound to be significant. We can certainly discuss the various channels and we will be in a better position to know this once the outcome is clear.

One thing I said in the European Parliament is that the European Union will stand behind Ireland. It will back Ireland. That is quite important in the sense of counting on the closeness and the solidarity of the rest of the EU.

The area where we have identified risk is that of centrally cleared derivatives but, as I said on another occasion, there must be a considerable degree of mismanagement for this risk to materialise. All in all, this seems to me unlikely. In other words, the authorities on both sides will be able to manage these risks in such a way that financial stability would be preserved. The exact ways in which these mitigating actions will be taken will be clear only when we know the outcome of the negotiation. That is why we have been inviting private sector parties, especially on the European side, to take all the mitigating action they can themselves without necessarily waiting for public intervention, because we do not know the outcome yet.

All in all, my perception is that things can be managed. However, if the private sector at some point were to decide there is going to be a cliff edge or an unmanaged process, then the private sector's behaviours could be a source of instability, which is something we have to monitor very closely.

I was asked my view of what is going to happen. I think the most likely thing is a gradual transition which will allow all parties to negotiate in the best possible way for their citizens.