A central issue in any macroprudential analysis is the conundrum that policy decisions that limit credit dynamics and require extra bank capital buffers are intended to build resilience in the event of a future adverse (cyclical or structural) shock but that support for such pre-emptive policies can erode during sustained periods of good economic performance in the hope that “this time is different” (Reinhart and Rogoff 2009).
Given the damage caused by the property boom-bust cycle and our unusually high exposure to tail risks such as shifts in global trade and taxation arrangements, the Central Bank of Ireland is strongly committed to being a leader in the implementation of a comprehensive macroprudential policy framework (Lane 2019b).