. 12 secondly, in terms of nancial markets, the shock led to a re - pricing of risk premia, with large falls in risky asset prices and tighter nancing conditions globally. 13 recent research shows that ireland is particularly sensitive to a tightening in global nancial conditions. 14 tightening global nancial conditions have implications for domestic lending, asset prices and economic output. thirdly, in response to the shock, governments around the world have signi cantly - and necessarily - increased spending to support their economies. 15 this support has been absolutely necessary to both to support affected households and business and to minimise the long - term damage of the shock to the economy. however, this also brings risk over the medium term with higher public debt levels. heightened public debt issuance could put pressure on government bond yields in some euro area countries. and while sovereign yields remain low in europe, this is against a backdrop of an incomplete nancial architecture. 16 the macro nancial risks of possible defaults, rising risk premia, tightening nancial conditions and increased debt burdens are coupled with the structural vulnerabilities we are exposed to as a small open economy. i have spoken previously about how our macro indicators tend to have higher highs and lower lows than other countries. 17 https : / / www. centralbank. ie / news / article / speeche - risks - resilience - and - policy - responses - to - covid - 19 - sharon - donnery - 17 - jun - 20 2 / 7 11 / 02 / 2021 risks, resilience and policy responses to covid - 19 - deputy governor sharon donnery our open economy is more sensitive to global developments. 18 the smooth functioning of global value chains, the health of the us economy and the presence of multinational enterprises ( mnes ) in ireland are all factors that affect irish output and household incomes. other risks have also not disappeared. the ongoing uncertainty surrounding brexit negotiations is a serious concern. we will focus on this in our next quarterly bulletin, to be published in july. the nancial stability risks of climate change and de - globalisation have not gone away. crystallisation of these risks would further test the resilience of the economy and the wider nancial system. resilience now let me turn to the resilience of the economy and nancial system. an important positive is that the starting resilience of households, businesses and the domestic banking system is signi cantly

designed, distributed and sold. as the financial services become more digitalised this will bring significant benefits and risks for financial stability, the regulation of firms and consumer protection models. all this brings more complexity into the system, and complexity brings risk. financial services firms and whole sectors face the challenges of : needing a clear vision for the future in a radically changing world ; having a sufficiently flexible strategy and building the necessary capabilities for thriving in it ; and be able to manage the significant transition risks along the way. and throughout, financial services firms will need to ensure that they are sufficiently focused on their customers, and serving them in a sustainable way. to ensure the central bank continues to meet our mandate we will continue to monitor and shape how the financial system evolves. we will continue to incorporate technology into how we supervise firms and evolve our supervisory practices and models to ensure they remain relevant for the financial environment. we will maintain a strong governance focus in our supervision of firms as technology evolves their approach. we will continue to enhance consumer protection in a digitalised world. it is important to point out, as outlined by my colleague grainne mcevoy25, the greatest risk to consumers comes not from technological developments, but from the culture of the firms in charge of the technology. if you put new technology in the hands of people and firms who are committed to protecting and delivering value for their customers, it is far more likely to result in positive consumer outcomes. the central bank will continue to seek to make sure that consumers and investors are protected irrespective of the technology they are using. this means that the same principles of regulation, including the rules of the consumer protection code, apply equally to both digital and traditional delivery channels. conclusion i will conclude here. i hope i have given some insights into the work of the central bank that is most relevant to mabs ’ s mission, and the value we place on your work. mabs has played a vital role in helping people deal with financial problems for many years. you have an important role to play in continuing to address the problems of the past, and those that will arise in the future. i look forward to mabs and the central bank continuing to work together and separately to deliver a resilient financial system that serves the needs of the people of ireland. thank you for your attention. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -