global financial crisis of 2008 are a great example of this. we introduced a broad and comprehensive reform agenda, which led to the adoption of the basel committee standards. this agenda has proved its worth time and again, helping us navigate many challenging new events. but there is still plenty of room for improvement. the failure of silicon valley bank two months ago, on the other side of the atlantic, reminded us that we can never become complacent. it was a classic bank run. 1 / 5 bis - central bankers'speeches similar to bank runs we have seen in the past. but it was also different, in that it was a direct consequence of svb's specific business model. and it was highly concentrated, due to svb's interest rate risk and strong reliance on uninsured deposits. the low interest rate on assets was locked in for a longer period than the one on liabilities. on top of that, svb made little use of interest rate derivatives to hedge this risk. in short : the cause of the failure was serious risk mismanagement. svb's 2021 annual report shows that a 2 percent interest rate hike would have led to a 35. 3 percent decrease in capital by the end of 2021. if the basel interest rate risk standards had been in place, this would have raised a number of red flags, causing the supervisor to intervene. but the basel standards were not in place. why not? because the us did not implement these standards for smaller banks. banks with less than 700 billion dollars in assets. in addition, between march'22 and february'23, the fed raised interest rates by 4 point 5 percentage points, which is much more than the rate hikes that had been tested for. what can and must we learn from this event? one : the basel iii standards have to be fully and consistently implemented, with minimal transitional arrangements or exceptions. if not, banks may fail to adequately cover certain long - term risks with sufficient capital. two : even the failure of a small non - systemic bank, a bank that we might not consider to be an internationally active bank, can lead to stress spilling over in global financial markets. stress that causes unrest among customers, that eats away at the general public's trust in the financial sector – trust we have carefully tried to restore over the past decade and a half, and that no financial institution can do without. that is why we should reconsider the criteria for determining systemic importance with a

in the public interest the central bank is also protecting the consumers of financial services. in concluding my comments on financial stability, i should stress that while the events currently under investigation carry serious reputational risks, they have not given rise to adverse implications for financial stability. profile of banking system one of the unfortunate fallouts from the problems that have arisen is the tarnishing of the image of the irish banking system, which has an excellent reputation internationally. this is most regrettable, as we have a sound and successful banking system that compares very well with international peers. the banks are also one of our largest employers with a workforce of nearly 40, 000. the banking sector accounts for 4 - 5 % of gnp and is a major contributor to government revenue. pensions and other types of savings hold significant shareholdings in banks so that the performance of banks is important for them. the banking industry is vital to this country. i should not pass without a brief reference to the ifsc. as you know, this has been one of our great success stories. the centre has a solid record of success even during the global downturn of the early 90 ’ s. there are now nearly 12, 000 people directly employed in the ifsc making a significant contribution to the economy. in a large industry like the financial services, problems and improper practices inevitably arise from time to time ; this is true of all countries. the most important point is that procedures and processes are in place to deal with them in a timely and expeditious manner, as the financial services regulator is now doing. despite the serious problems that have arisen, i believe that there has been a marked improvement in corporate governance standards in the industry in recent years. any recommendations emanating from the current investigation that suggest further improvements are necessary should be implemented without any delay. i should emphasise that no regulatory system - no matter how extensive or expensive can guarantee that mistakes, inappropriate practices or behaviour will never happen. however, it is essential that when such events occur - despite a comprehensive regulatory system being in place - the regulatory machinery is capable of dealing with them effectively and speedily. i believe that the measures put in place since the mid - nineties together with the forthcoming enactment of the new powers presently at report stage in the dail, will provide such a system. foreign exchange charges there was no statutory control over bank charges prior to the enactment of the central bank act, 1989. section 28 of the 1989 act placed a statutory requirement