a recurring phenomena in market economies and i suggest there is an important role for ‘ long memories ’ in financial regulation. we need to guard against the swinging pendulum where regulation has tended to 1 / 4 bis central bankers'speeches weaken during a boom and is then strengthened following the inevitable bust. 4 the benefits of financial regulation tend not to be noticed, but the cost of things going wrong is felt by everyone, and rarely forgotten. the green transition awareness of these costs and benefits is important in times of economic transition, not least the most talked - about right now, the transition to a carbon - neutral economy and the need to correct a major market failure. i agree with us treasury secretary yellen that “ our most financiallystable future is our most environmentally sustainable future. ” 5 the future will see new regulations putting requirements on institutions to embed esg risks into their strategies and risk management frameworks. but collective action by all of us – governments, policymakers, firms, investors, consumers, and regulators – will be needed to overcome this major market failure. and in the next few months, our new climate risk and sustainable finance forum will bring together key industry and other stakeholders to share knowledge and understanding of the implications of climate change for the irish financial system. the digital transition turning to the digital transition, technology is not only re - shaping the way we engage, interact and do business, but it is also having a structural impact on our economies and the financial system. the benefits of operational resilience and investment in technology were evident throughout the pandemic. but a competitive digital economy is central to europe ’ s approach to shaping its future. payment and e - money firms, for example, are expanding into the financial services ecosystem. and ireland is the european home to some of the global bigtech firms. we established an ‘ innovation hub ’ a few years back to allow fintech firms – as they moved from the world of technology into a regulated financial environment – to engage with the central bank outside of existing formal regulator and firm engagement processes. we are going to review the hub this year to ensure we are engaging effectively in light of the rapidly - changing landscape. in the interests of time, i will not talk about central bank digital currencies. and in the interests of managing my inbox, i will not talk about crypto, other than refer you to the blog on digital money that i wrote last year. 6 the changing financial system implicit in what i have said already is the

gabriel makhlouf : trends and transitions - an irish perspective on global and european regulation remarks by mr gabriel makhlouf, governor of the central bank of ireland, to the european financial forum, virtual, 17 february 2022. * * * thank you for inviting me to address you today and welcome to everyone tuning in from around the world as well as those at home here in ireland. my main theme today is resilience. we have seen the benefits of resilience over the last two years and we will continue to focus on it. mark twain is reputed to have said that “ history doesn ’ t repeat itself, but it rhymes ” and i agree with that. we certainly cannot lose focus on the risks that have brought down financial systems in the past : misaligned incentives and excessive credit growth, leverage, and liquidity transformation. these risks are always there. and to paraphrase carmen reinhart and ken rogoff, these times are rarely different. 1 on the other hand, transformational change is in the air. our roles are changing as we adapt to significant economic transitions and at a pace that is only going to accelerate further. economic resilience through transitions in my first speech as governor in 2019 i spoke about ‘ economic resilience ’ and what i considered some of the major transitions of our time. 2 economic resilience is in essence the ability of an economy to manage change, whether it is to withstand or recover from shocks or the more gradual evolution to a different state. of course back in 2019 i wasn ’ t talking about a global pandemic but about four particular economic transitions : climate change, technological change, change in the financial system, and the uk ’ s withdrawal from the eu. in many respects most of those transitions remain as important today as they did in 2019. they are also driving some of the key global and european trends in financial regulation. the economics of regulation economic theory tells us regulation is about protecting the essential needs of the public, whether constraining monopoly power, preventing distortions to competition, ensuring market integrity or simply correcting for market failure. 3 in short, regulation is about supporting positive outcomes. but all policy interventions have costs as well as benefits. and we need to balance these carefully as we develop regulation and policy more broadly. put simply, we want to ensure the financial system supports the effective and sustainable functioning of the economy. and, like the economy, regulation happens in cycles. financial crises are