But that probably reflected a lack of mutual understanding of the methodology and professional language as between economists and supervisors more than the institutional separation, which was by no means rigid. In the end, senior officials in both institutions, as well as many elsewhere at home and abroad, were too optimistic about the strength of the economy and the Irish banks.
The regulatory framework takes into account the macroeconomic situation as well as the huge costs of economic booms and busts brought on by financial instability – a cautious approach that has till now served us well.