It is clear that credit dynamics are not the primary driver of the current cyclical upswing in Ireland. While the Central Bank is intent on building the resilience of the financial system to cyclical reversals, it is clear that fiscal policy must take the lead role in ensuring that the current strong growth performance does not tip over into an unsustainable overheating phase.
In particular, more ambitious fiscal surplus targets for 2019-2021 may be advisable in containing cyclical risks. In relation to the latter, I have emphasised that a well-functioning, trusted financial system is essential if Ireland is to meet its long-term goals in terms of economic and social development, managing the ageing of the population and supporting the transition to a low-carbon economy.