non - performing loans across the euro area, i take a great interest in this topic and look forward to hearing the thoughts of our spanish and italian guests on the dynamics underlying bank profitability in their countries. 1 in the area of financial regulation, the changes experienced on both sides of the atlantic since the crisis have been dramatic. the crisis response in all of our jurisdictions has involved a wide range of regulatory interventions, from enhanced stress - testing capabilities and communication strategies to the development of the macroprudential toolkit. the speed with which these features have been conceived and implemented is of course to be applauded and many of the people in this room have been important contributors to the rolling - out of this new central banking architecture. however, such rapid and large - scale responses often leave us vulnerable to “ blind spots ”, unintended consequences and implementation challenges. discussions such as those that will take place over the next two days are an important part of our attempt to fine - tune and enhance our performance as macroprudential authorities and regulators. 1 / 2 bis central bankers'speeches the importance of the housing market as a driver of the credit cycle as well as the status of mortgages as the chief source of debt and financial vulnerability for most households has meant that in ireland we have paid a particularly strong focus on macroprudential measures. in this context, we are delighted to have a number of focussed sessions on this topic. we underwent an extensive review of the first 18 months ’ experience with loan - to - value and loan - to - income restrictions in november last year. we are committed to reviewing the measures using a wide evidence base on an annual basis. 2 we hope to be able to both learn from you and inform you as we share experiences tomorrow. apart from our own experience here in ireland, the focussed sessions on housing finance and the interaction between government, lenders and the mortgage borrowers in the united states promises to be particularly illuminating. despite the timing on a friday, i encourage you all to stay until tomorrow afternoon to hear the insights of our four guests from the united states on this topic. www. centralbank. ie / news - media / press - releases / non - performing - loans - workout - in - the - euro - area - deputygovernor - central - banking - sharon - donnery - at - bruegel 2 see for example the central bank ’ s macroprudential mortgage measures 2 / 2 bis central bankers'speeches

- war level – its notes were explicitly expressed as payable in sterling. indeed the words “ sterling payable to bearer on demand in london ” were printed on these irish notes into the 1950s. by 1979, the one - for - one no margins peg with sterling had persisted for over 150 years. no better evidence of the financial conservatism of the political and business elite in this period could be desired. but was the sterling link a good system for the republic? one political argument for retaining it was to ensure that currency distinction would not exacerbate the economic barriers resulting from partition in the 1920s. however, as has been well documented, the intensity of northsouth commercial and economic interactions was rather modest in subsequent decades, so a longer historical time period is covered in honohan ( 2002 ). the fluctuations prompted the famous parliamentary irish currency report of 1804 ( cf. boyle and geary, 2004 ). bis central bankers ’ speeches this can hardly be thought a decisive consideration. besides, the idea of “ breaking the sterling link ” had an attractive political ring to it for some of those keen to sever links with britain. on the other hand, trading links across the irish sea remained remarkably strong for the early decades of independence. as late as 1960 almost three - quarters of the republic ’ s exports went to the uk and almost half of her imports came from the uk. even after six years of eec membership had contributed to geographic diversification of irish exports, the uk accounted for about a half of both exports to and imports from ireland. of course gravity retained its pull. but the lack of a need to set up foreign exchange hedging or even foreign exchange purchase and sales procedures when exporting to ( or importing from ) britain may was sometimes thought to have been an inertial factor slowing the diversification of irish export trade into more dynamic parts of the european and world economy – though export diversification was certainly in progress. the openness of the capital account vis - a - vis britain and the conservatism of the irish banks, perhaps attributable to few sound lending opportunities presented to them, resulted in a large accumulation of liquid banking assets in the london money market in the early decades of independence ( figure 2 ). quite the opposite to what happened later, then, in this regard. not surprisingly, interest rates too tended to track those in london. but there were two notable exceptions. the first was in 1932 with the formation of