##ised by mortgagerelated securities. the bill would render the type of asset transfers required to use these financial instruments effectively impossible. the eurosystem would have concerns about the realisation of such collateral in the event of a counterparty default. this, in turn, has the potential to restrict the capacity of irish banks to access central bank funding. if banks cannot mobilise collateral quickly in times of financial stress, crises can get worse, very quickly. whilst the bill makes an exception for failing or likely to fail institutions, this is not sufficient. if banks are close to the point where they are deemed failing or likely to fail, they are likely to have taken actions ( such as reducing availability of credit ) that will harm the economy. the entire focus of the resilience changes made over the last decade have been to try and prevent institutions getting into a situation where they are failing or likely to fail, precisely to guard against the kind of events that trigger damage to the system, to businesses, households and consumers. * * * the financial crisis serves as a stark reminder of the severe costs of financial instability to society as a whole. while there has been significant progress towards repairing the banking system, legacy vulnerabilities from the crisis remain. the restrictions imposed by the bill would reduce the ability of the banking system to absorb shocks in the future. ultimately, these costs will be faced by households and businesses in ireland. over the last decade, a lot of work has been undertaken to enhance the resilience of the banking system. this has included increasing capital, reducing non - performing loans ( npls ) and making funding sources more stable. 2 / 3 bis central bankers'speeches we continue to expect banks to use a full toolkit to reduce npls. the ability to sell portfolios – while ensuring full compliance with statutory consumer protections – is important. since the 2013 peak, the stock of npls held by the retail banks has declined by €67 billion. around 12 percent of that reduction was achieved through residential loan portfolio sales. in our view, the introduction of this bill will significantly constrain the ability of banks to engage in portfolio sales and, so, limit their ability to deal with outstanding vulnerabilities from the crisis. these constraints will hinder the continued post - crisis recovery of the banking system. and, crucially, it will reduce the ability of the banking system to deal with any future macroeconomic downturn and the accompanying deterioration in asset quality. put

financial health of the irish economy, can rise as a result of developments from outside the economy. currently, there are several international developments that have implications for the stability of the irish economy and financial system. the most important concerns are the large global imbalances, commodity price pressures and expectations of monetary tightening globally. conclusion let me conclude this short address by stating what we hope to achieve by publishing our annual financial stability report. first, we hope to identify potential risks in the irish financial system and second we will endeavour to raise the level of awareness of these risks by all economic agents, including households and businesses. finally, we propose to continue our ongoing dialogue with the banks in the context of the findings of the report with the objective of arriving at a common understanding of any developments that might suggest a risk to financial stability.