Cormac Devlin (Dún Laoghaire, Fianna Fail)
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153. To ask the Minister for Finance his response to the Financial Stability Review published by the Central Bank last month; and if he will make a statement on the matter. [39247/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Central Bank of Ireland’s report ‘Financial Stability Review 2025: I’ was published in June. The report is one of the key publications from the Central Bank, published twice a year. The review sets out some of the main risks facing the Irish financial system, assesses the resilience of the system, and the Central Bank’s macroprudential policy stance.

Since December 2024, the risks facing the global financial system have risen due to elevated trade and economic policy uncertainty. I note the report’s concerns around the vulnerability of certain parts of the economy to the current uncertain global trade environment and welcome the Review’s positive outlook on the resilience of the domestic banking system.

The Irish economy is entering this period of uncertainty from a position of strength. Households, businesses and the domestic banking system have become financially stronger over the past decade, providing a buffer to adverse shocks. However, as the Governor of the Central Bank said, it is not time for complacency. The current uncertainty underlines the importance of capital buffers, continued prudent risk management, and building financial and operational resilience. The Central Bank’s decision to maintain its counter-cyclical capital buffer rate at 1.5 per cent is relevant in this regard.

In this publication in June, the Central Bank also included a particular focus on the non-bank financial sector. I noted that while levels of volatility increased in many markets in early April, markets functioned broadly well and there has been no evidence of unmanageable liquidity demands. Some cohorts have seen higher redemptions and/or margin calls. The Central Bank continues to prioritise the development of a robust macroprudential policy framework for the funds sector.

While the Central Bank are mandated to protect financial stability, my Department chairs the Financial Stability Group (FSG), which consists of senior management from the Department of Finance, the Central Bank, and the NTMA, who meet regularly to assess risks and emerging risks to the financial system and economy. As part of the FSG, the Department considers the Central Bank’s Financial Stability Review ahead of its publication every six months.

In terms of current global trade uncertainties, the Department, the Central Bank and the NTMA, are engaging regularly to monitor and assess global developments and their impact on the financial system.