Ms Sharon Donnery:

I thank the Governor and Deputy Doherty. Deputy Doherty referred already to some of the work that we have been doing in this sector, and maybe I will make some general comments about the sector first before I talk a little bit about what exactly we are going to do. As the Governor mentioned in his opening statement, there has been growth in this market-based financed or non-bank financed sector globally, particularly so in Ireland. It is important to say that this type of financing does have many benefits, and there is a big debate in Europe about the heavy reliance of Europe on banks, for example, and that these types of funds and this type of non-banking sector allows a diversification of funding and investment. That is part of the debate at European level on capital markets union. We also recognise that these types of finance funds and so on offer diversification and therefore can diversify risk.

At the same time, a key issue for us is about resilience, so understanding if there were difficulties in a sector such as this, would risks be amplified or would the funds themselves, the wider sector and the economy be resilient to how those shocks would be handled. That is really what we have been doing. As was mentioned, a lot of the work up until now has been focused on data gathering and understanding what is here, the size of what is here and so on. Some of those funds are very internationally-focused. They do not really interconnect with the Irish economy at all and are really serving businesses outside of Europe and in the rest of the world. In the case of the funds the Governor has mentioned in particular, they are investing in commercial real estate in Ireland, and about 35% of commercial real estate in Ireland is now held by these different types of investment funds. We really want to look at that in more detail, so who are those investors and how would those funds react and behave in times of stress if that were to happen, and do we need to do anything to consider how that might be managed in a better way.