, the successful roll - out of a vaccine, the economic implications of the related public health response and the more medium - term implications of this shock. while the domestic outcomes are most pertinent, the fragility at a global level of rising sovereign and corporate debt and the potential for tighter financing conditions could have implications for economic activity and asset prices in ireland. alongside this we have the very near - term reality of moving to a new phase in eu - uk relations. irrespective of the outcome of the current negotiations, the uk ’ s new status as a third country is a negative event, especially for ireland. the delay in clarifying the ultimate trading relationship between the eu and the uk compounds the near - term challenges, adding to uncertainty, and limiting time available to reduce inevitable frictions. let me be clear, having a comprehensive trade deal for goods would be better than not having one, but it remains only the better of two unfortunate outcomes, and implementation presents significant challenges. in this fsr, our analysis includes a more forward - looking assessment of the resilience of the domestic banking system to two possible scenarios, consistent with differing paths for what is an uncertain macro - financial risk environment out to 2022. while the more adverse of these scenarios in particular would be expected to result in significant losses, the system in aggregate has sufficient capital to absorb such losses and continue to support firms and households. 1 / 4 bis central bankers'speeches relative to the previous domestic and global financial crisis of the late 2000s, both the nature of the current shock, and the improved starting resilience of the banking system and the economy more generally, means that the system as a whole is better able to serve the needs of businesses and households through this period of uncertainty. government supports for households and businesses are supporting their resilience, and in turn that of the banking system. however, while analysis such as this is vital to understand the risks posed to the banking sector, i would also highlight the following points : first, the degree of uncertainty with these projections is high, not just in terms of the macrofinancial outlook, but also the impact of the various extraordinary policy supports, and how both of these ultimately interact with banks ’ balance sheets. second, the system - wide position does not discount the potential for different impacts on individual banks. given the heightened levels of uncertainty, all regulated firms need to prepare and plan for a variety of eventual outcomes. third, the response of the banking

gabriel makhlouf : the publication of the financial stability review 2020 : 2 remarks by mr gabriel makhlouf, governor of the central bank of ireland, on the publication of the financial stability review 2020 : 2, 26 november 2020. * * * today we publish our latest financial stability review ( fsr ). the fsr sets out our judgements on the main risks facing the economy and financial system, the capacity of the financial system to withstand those risks, and the macroprudential policy actions we are taking to safeguard financial stability. for the first time, today ’ s publication contains a forward - looking assessment of the resilience of the domestic retail banking system. alongside this we also have the results of the latest reviews of our macroprudential policy tools, including the annual mortgage measures review. the extraordinary circumstances we find ourselves in as a result of covid - 19 continues to be the main backdrop for our assessments in this fsr. the global and domestic economies have begun to recover from the initial phase, and the acute liquidity challenges have been managed through fiscal, monetary and prudential policy support. however, the full transmission of this now extended shock to the economy and financial system will take time, as the balance between the impact of near - term policy supports and the depth of the implications of this shock for households, businesses and the financial system plays out. we remain in a position where liquidity challenges have not, as yet, resulted in widespread solvency challenges. the economic shock triggered by measures taken to protect public health, both domestically and across europe, has been extended with the upsurge in cases since the autumn. with the level 5 restrictions in ireland these past weeks we have seen covid - related unemployment rise again in sectors most affected. the outcome for the domestic economy through the fourth quarter of 2020 will probably be somewhat weaker than expected when we published our latest forecasts in the quarterly bulletin on 6 october. the macroeconomic impact of the most recent public health restrictions is likely to be less severe than those in the spring, as the nature and extent of the latest restrictions is different, enabling more activity in a number of sectors, such as construction. in addition businesses and consumers have adapted and innovated ( as we have all seen from the click - and - collect options that have become available, for example ). however the macro - financial outlook beyond the current quarter is characterised by huge uncertainty, tied to the progress of the pandemic