It is important banks hold sufficient structural buffers as well as cyclical buffers to guard against the higher levels of macroeconomic risk Ireland faces. Having buffers means capital depletion does not lead to instability in financial markets. This makes a tightening of credit conditions less likely. Resilience in the banking system should be locked in through the more active use of capital buffers.
The impact of the recent global financial crisis and the subsequent downturn in developed countries’ economies and yields shifted investors to review other options such as developing and emerging markets. We need to position our markets strategically in order to take advantage of these options.