financial system than it would otherwise be. in that case, prudential rules restricting domestic financial institutions ’ cross - border operations will be needed. the feasibility of this option is also dependent on support for the necessary reforms. but even though that condition is fulfilled, it is not likely that excess exchange rate volatility will disappear, as it is also rooted in the inherent volatility of asset prices and the small size of the domestic foreign exchange market. but the fluctuations need not be larger than many other and larger countries appear able to tolerate. finally, it is appropriate to emphasise that independent monetary policy under a flexible exchange rate regime can take many forms, including different types of price stability target and taking into consideration the role of money and credit in policy formation. it can therefore change from one period to another without necessitating major decisions concerning the currency as such. 1. 7 capital controls and exchange rate regime options lifting the capital controls is one of the most important yet most complex challenges facing iceland at present. the controls have proven an important means of achieving stability in the wake of the financial crisis. because of this, they were approved by signatories of the eea agreement even though they are contrary to the spirit of the agreement. in the long run, however, it is critical that they be abolished. there are at least two main reasons for this. first, the costs associated with the capital controls grow over time and will ultimately exceed the benefits. second, they are in contravention of iceland ’ s international obligations. for the long term, it will be impossible to retain universal restrictions on capital outflows and remain in the eea. iceland must therefore make a genuine attempt to lift the controls. it may prove complicated and time - consuming, but there is no other option. this gives rise to the question of how capital account liberalisation is related to the choice of currency and exchange rate policy. do some policy options make it easier to lift the controls than others? which comes first, lifting the controls or deciding the currency issue? at what exchange rate should so - called offshore kronur be converted if iceland establishes a currency board or adopts another currency unilaterally? is it possible that capital account liberalisation will wait until – or even beyond – accession to the eu? these questions are not easy to answer, and exhaustive answers are beyond the scope of this report, but a few points can be made nonetheless. the most desirable option must be to lift

ed sibley : central bank of ireland's financial regulation functions restructure, relevant issues this year and forthcoming priorities address by mr ed sibley, deputy governor of the central bank of ireland, at the association of compliance officers of ireland ’ s ( acoi ) annual conference, dublin, 10 november 2017. * * * introduction good morning ladies and gentlemen. i am delighted to be here at the association of compliance officers of ireland ’ s ( acoi ) annual conference. thank you for the invitation to speak here today1. it is the second time this year that i have spoken at an acoi event, which i hope is evidence of how important i consider the role of compliance to be to our mandate of safeguarding the stability of the financial system and protecting consumers. when i spoke at your event in march2, i covered, among other topics, my expectations of compliance officers. this warrants repeating. my comments today will also cover the recent restructure of the central bank ’ s financial regulation functions, a summary of relevant issues arising from our work in 2017, and some of our priorities for 2018. central bank restructuring of financial regulation on the 1 september 2017, the central bank ’ s financial regulation function was split into two distinct pillars : prudential regulation and financial conduct. the restructuring reflects the critical and equal importance of both our financial stability and financial conduct mandates, the ongoing evolution and increasing complexity of ireland as a financial services centre, and a strengthening of our approach to conduct supervision, over and above our longstanding work on, and commitment to, consumer protection. the two pillars, led by me as deputy governor, prudential regulation, and by derville rowland as director general, financial conduct, are working as equal partners to drive delivery of our mandate of safeguarding stability and protecting consumers ; and that vision of a financial services sector that serves the needs of the economy and its customers over the long term. the new structural arrangements are designed to enhance how we operate as one bank, recognising the interlinkages, dependencies and need to challenge each other across financial stability, prudential regulation and financial conduct disciplines. as the governor of the central bank has stated3 “ measures applied to protect consumers range from working to ensure financial stability, through prudential and macro prudential regulation, supervision and enforcement to [ provision of ] personal financial information. ” approach to prudential regulation delivery of this vision of financial services in ireland requires that regulated firms