. this is particularly important in the context of ireland ’ s vulnerability as a small, open, economy, and the risks of which i referred to earlier. we have also taken forward - looking macro prudential actions, which include : the banking crisis – a decade on the activation of the counter - cyclical capital buffer, which is designed to build resilience during times of growth, and so that it can be released during a downturn, avoiding the procyclical withdrawal of credit supply ; the introduction of borrower - based measures that limit loan - to - value and loan - to - income ratios, which increase the resilience in the system and reduce the risk credit - fuelled property bubbles from over - borrowing and over - lending ; and advice to government regarding the need for running budget surpluses as a precondition for the running of stabilising, counter - cyclical deficits in a future downturn. if surpluses are not built up we increase the risk of requiring pro - cyclical fiscal austerity policies. xxi my colleague, sharon donnery, deputy governor, central banking, will speak more on these macro prudential measures in her remarks at the dublin economics workshop on 14 september, so i will not discuss in detail here today. we are also seeking to ensure that the financial services industry pays the direct costs of these necessary enhancements to regulation and supervision. over the coming years we are aiming to increase the levy paid by regulated entities to 100 % of our regulatory costs. looking ahead the irish financial system, and the banking system specifically, is undoubtedly stronger and more resilient that it was 10 years ago. after many years of contraction, it is also growing again, becoming increasingly complex in nature and increasingly internationally focused, in part due to brexit. so, there are grounds for optimism. however, as i have touched on, weaknesses remain, and as i have also referenced, it is likely that we are closer to the next downturn than we are to the banking crisis – a decade on the start of the last one. even as the sun is shining today, there are clouds on the horizon. one can hope that future storms are not as severe as the last one, but storms there undoubtedly will be. in this context, it is noteworthy that both globally and domestically the levels of debt that characterised the build up to the crisis has not disappeared. in fact, global debt levels are higher now than they were in 2009

or flawed regulation, supervision or both ; underestimation of the riskiness of securities created with financial engineering ; bad incentives ; excessive funding of long term assets with short - term liabilities ; ratings agencies failures ; flawed assumptions regarding house prices ; elevated household debt ; a belief by bankers that their institutions were too big to fail ; global imbalances ; financial assets accounting ; and too loose monetary policy. it is a long list! across the globe, “ financial innovation …. vastly outpaced regulation and supervision …. financial institutions went on a frenzy of reckless risk - taking …. [ relying ] more on short - term funding, dramatically lowering lending standardsv. ” the banking crisis – a decade on many of these failures are clearly relevant to the catastrophic impacts of the financial crisis in ireland too. they have been well covered in various reportsvi, including the honohan reportvii, which presented five root causes specific to the collapse of the irish banking system : macroeconomic and budgetary policies that contributed to the economic overheating, and which relied to an unsustainable extent on the construction sector and other transient sources for government revenue ; comprehensive failure of bank management to maintain safe and sound banking practices ; a regulatory approach which was too deferential and accommodating, insufficiently challenging and not persistent enough ; an under - resourced approach to bank supervision that, by relying on governance and riskmanagement procedures, neglected quantitative assessment and the need to ensure there was sufficient capital to absorb the growing property - related risks ; and an unwillingness to take on board sufficiently the real risk of a looming problem and act with sufficient decisiveness and force to head it off in time. in other words, a myriad of decisions both large and small, including decisions not to act ( inaction bias ), all underpinned by implicit and explicit assumptions, led to the global financial crisis and how catastrophic its effects were in ireland. there is also a strong argument that ireland, as a small and open economy, was and is more susceptible to the economic cycle and is likely to experience more froth in the good times and is at greater risk of severe downturns than larger, less open economies. the banking crisis – a decade on results of the crisis as is well documented, ireland experienced a credit - fuelled property bubble, which inflated both residential and commercial prices, driving individual indebtedness, reducing overall competitiveness and encouraging an over reliance on property based taxes in the