If, realistically, agency problems imply that the conditions of intermediary balance sheets influence the overall flow of credit, then a large fall in asset valuations can disrupt lending and amplify the consequences of the shock on the real economy through a disproportionate increase in credit spreads.
* * * Chair, Committee members, Thank you for the invitation to discuss the Central Bank’s views on the No Consent, No Sale Bill 2019 (‘the Bill’). I am joined by Gráinne McEvoy, Director of Consumer Protection and Vasileios Madouros, Director of Financial Stability.