as a society, including addressing climate change and supporting a sound transition to a climate neutral economy, an issue i will return to that later. all of this means that there is a need for continued and renewed focus on creating a capital markets union ( cmu ), to integrate national capital markets into a genuine single market, while making sure that the eu is a safe place for individuals to save and invest. by design and by necessity, cmu is a project that is continually evolving. it has a fundamental role to play to support an inclusive recovery from the pandemic and to prepare the european economy to be more resilient in the face of the challenges that lie ahead. from the central bank of ireland ’ s perspective, we believe that an effective and well - designed cmu could bolster financial stability and improve resilience. it could lower costs, improve choice and strengthen protections for consumers and investors, especially in cross - border transactions. and it could improve macroeconomic conditions by providing additional, diversified, sources of financing to firms, especially smes. as a member of the governing council of the ecb, i believe one of the important benefits of cmu is the role it can play to enhance the transmission of monetary policy across countries, banks and sectors. firms with fewer outside financing options – smes in particular – are more likely to be faced with higher mark - ups on loans by banks who may also be less inclined to pass on interest rate reductions to them. increased access to finance ( bank or non - bank ) – one of the goals of cmu – could make pass - through of monetary policy more complete. effective regulation cmu requires changes to existing regulatory frameworks. making changes to this “ single rulebook ” – which was developed in the years following the global financial crisis ( gfc ) – needs to be done with care. but we also need to balance that care with taking appropriate risks. at the end of the day, we need change to make progress. for example, while we support the objectives of encouraging insurance companies to invest long - term – or encouraging banks to invest in smes – we also need to ensure the appropriate prudential treatment of long - term investments. and while there are potential benefits for consumers and investors participating in capital markets we need to ensure that investor protection considerations are at the centre of any proposals to increase retail participation. the ongoing reviews of both the european long term investment funds ( eltif ) regulation and the alternative investment fund

result of brexit could add to demand, although brexit could also have a negative effect, in particular on retail commercial real estate if consumer sentiment is adversely affected. existing commercial real estate exposures leave irish retail banks vulnerable to any change in market conditions. house price growth has been rising steadily since late 2016, while survey data show further price increases being expected over the medium term. high rental growth is also being observed. a scarcity of housing in certain locations is contributing to price and rent developments in the residential property market. there has been a substantial decline in vacancy rates in recent years, particularly in high population growth areas. the number of residential properties listed for sale or for rent is also low. there is some uncertainty surrounding official housing completion data at present but the number of new units being built and likely to be constructed over the medium term is below demand. the central bank introduced macroprudential mortgage - lending requirements in february 2015. the outcome of a review of these requirements was announced in november 2016 and found that the regulatory framework is appropriate and effective in meeting the objectives of the measures, which are to strengthen households ’ and banks ’ resilience to shocks and to curb price - credit spirals in the housing market. we have committed to review the measures on an annual basis. the general government deficit ratio continues to improve and the medium - term deficit target is projected to be achieved in 2018. the public debt burden, at around €42, 000 per person resident in the state, however, remains high by historical and cross - country comparison, leaving the sovereign vulnerable to real economy and financial market shocks. looking at the financial sector, irish retail banks ’ profits, while remaining positive, fell in 2016 as a substantial reduction in the write - back of impairment provisions occurred. operating income increased last year, with the domestic market accounting for almost 80 per cent of revenue. brexit could adversely affect those irish retail banks with a significant presence in the uk. new lending to the uk fell by over 18 per cent in the twelve months to 2017q1, with a drop in uk mortgage lending and exchange rate movements contributing. irish retail banks ’ aggregate loan book has become more concentrated in recent years in residential mortgages and in lending to irish counterparties. developing a sustainable model to address declines in their main income sources and the eventual normalisation of interest rates represents a challenge for irish retail banks. 2 / 3 bis central bankers'speeches the aggregate value of total assets held by