downside risks to growth : lessons from past shocks ”, box 1, financial stability review, 2020 : 1, central bank of ireland ; beutel, j., emter, l., metiu, n., prieto, e. and schueler, y., ( 2020 ), “ dilemma or trilemma? evidence from the international transmission of us financial shocks to downside risks to growth ”, mimeo, available at ssrn. 15. financial stability review 2020 : 1, central bank of ireland. 16. ibid. 17. donnery, sharon ( 2019 ) “ small open economies – vulnerabilities in a changing world ”, speech delivered to the dublin economics workshop, 13th september 2019. 18. ibid. 19. galstyan, v. & v. herzberg “ external balance sheet risks in ireland – part ii ”, central bank of ireland, financial stability notes, vol 2020, no. 4. 20. financial stability review 2020 : 1, central bank of ireland. 21. quarterly bulletin q2, 2020, central bank of ireland. 22. financial stability review 2020 : 1, central bank of ireland. https : / / www. centralbank. ie / news / article / speeche - risks - resilience - and - policy - responses - to - covid - 19 - sharon - donnery - 17 - jun - 20 6 / 7 11 / 02 / 2021 risks, resilience and policy responses to covid - 19 - deputy governor sharon donnery 23. see dear ceo letter 8 june 2020, central banks expectations for payment breaks in banks and other lenders. 24. see : laeven, m. l. and valencia, m. f., 2018. “ systemic banking crises revisited ”, international monetary fund, also jorda, o., schularick, m. and taylor, a. m., 2013. “ when credit bites back ”, journal of money, credit and banking, 45 ( s2 ), pp. 3 - 28. 25. powell, jerome. h. “ covid - 19 and the economy ” speech at the hutchins center on fiscal and monetary policy, the brookings institution, washington, d. c., 09 april, 2020. 26. holton, s., stuart, r. & g. phelan “ covid - 19 monetary policy and the irish economy ” central bank

: / / www. centralbank. ie / news / article / speeche - risks - resilience - and - policy - responses - to - covid - 19 - sharon - donnery - 17 - jun - 20 1 / 7 11 / 02 / 2021 risks, resilience and policy responses to covid - 19 - deputy governor sharon donnery thirdly, the very speed of the effect on the economy presents a challenge to policymakers given that key of cial indicators generally come with a lag. 7 a business cycle indicator ( bci ) for the irish economy, developed by the central bank, offers more timely assessment. 8 the bci indicator fell to an unprecedented low in april, almost twice as low as the trough of the nancial crisis in 2008 / 2009. the severity and steepness of the drop suggests that the initial economic effects of the covid - 19 pandemic are worse than the last crisis. it remains to be seen how these effects persist as the economy slowly reopens, and businesses, workers and policymakers learn to live with covid - 19 over the medium term. speaking here at the iiea last year, i pointed to the uncertain path ahead for the irish economy, the clouds on the external horizon, contrasted with potential domestic overheating. 9 today, uncertainty stems from the path of the virus, the ability of global public health efforts to suppress or manage it, and how these efforts are intrinsically linked to the level of economic activity. looking at a range of forward looking measures, there has been an enormous increase in economic uncertainty, greater than that seen in the 2008 / 2009 nancial crisis. 10 in this uncertain environment, swift, decisive and credible policy action can provide some certainty. risks in the last few months, there has been an abrupt and severe deterioration in the macro - nancial outlook in ireland. the collapse in global economic activity has the potential to trigger long - identi ed risks to nancial stability. 11 firstly, this collapse in activity poses risks to nancial stability through possible defaults. the duration of the shock will largely dictate whether short term liquidity issues will, in turn, become solvency issues for households, businesses and – by implication – parts of the nancial sector. in addition, the central bank / scsi property survey reports a median expectation of falls in property price valuations, while the ecb bank lending survey reports expectations of reduced demand for some forms of credit