Mr. Gabriel Makhlouf:

The Senator asked a range of questions and I will return to some of them in more detail. To be clear, there is a difference between the macroprudential toolkit, which is fairly extensive but not complete, and the monetary policy measures the Senator also mentioned, which are about low interest rates. I will say a little about the macroprudential framework because it is important. One of the first decisions we made in March, when the pandemic started, was to release the counter-cyclical buffer to ensure that banks had as much liquidity as they needed to maintain lending in the economy. The better-known part of our macroprudential toolkit is the borrower-based mortgage measures, which we review every year. We are in the process of reviewing them now and will announce the outcome of our review towards the end of the year.

As for monetary policy and the low rates that exist, low rates are now flowing from every major central bank in the world. Governments throughout the world, including in Ireland, are using the availability of low-cost finance to respond to the pandemic. Those monetary policy decisions we took in March and expanded in June are having a direct effect on Ireland's access to liquidity and enabling the State to respond to the economic shock we are experiencing.

The Senator talked about the longer term. In my view, as I wrote in my letter to the Minister for Finance in advance of the presentation of his budget, we need primarily to do three things right now, the first of which is to focus on getting households and businesses through the shock, which we will do, particularly in the case of businesses, by ensuring the productive capacity of the economy are supported as much as possible and that scarring effects such as long-term unemployment are avoided. Second, notwithstanding the fact that the cost of debt is currently very affordable, we need to plan, once we see our way through the pandemic, to bring debt to a more sustainable position. It is currently sustainable but we need to rebuild the buffers in order that we will be ready for any future shock that happens. Finally, and importantly, we need to plan at the same time for the long term and for the fact that structural change may be needed at the end of this pandemic. We need to start planning for some of the longer-term challenges the economy has, including in respect of climate change and the impacts of digitisation and of an aging society. What the ECB decides to do about its investment or otherwise in green bonds will form part of the review of our monetary policy strategy that we are in the middle of.

I will try to send a letter to the Senator with a bit more detail on what I have just said in response to her questions.