Speaking at the Institute of International and European Affairs

I would like to start by thanking the IIEA for inviting me to speak here today.

In my remarks today, I will address the impact of Brexit on the Irish financial services system and on financial services firms, both those currently supervised by the Central Bank of Ireland and those seeking to relocate business here. I will not dwell on the economic risks of Brexit; not because these are unimportant, when clearly they are, but because they have been well flagged in other Central Bank speeches and publications [See most recent Central Bank of Ireland Macro-Financial Review].

While there is still considerable uncertainty, it is clear that Brexit will have broad, fundamental impacts, and will substantively alter the functioning of the UK, Irish, and European financial systems. We, at the Central Bank, while hoping for the best, are continuing to prepare for plausible worst-case scenarios, including a ‘hard Brexit’.  This involves ensuring that existing Irish firms understand and are planning for the impact that Brexit will have on their businesses; and engaging with those firms that are executing plans to move to Ireland, or firms changing their business models in Ireland.

There are many asymmetries associated with Brexit.  For example, there are asymmetries in the relative importance of Brexit to the current members of the EU, with the UK, obviously, and Ireland the most affected. There are, consequently, asymmetries in the incentives that those affected by Brexit have, and consequently the decisions that they are making.