regulator of one of the largest fund hubs globally has meant for us that it is important that we contribute constructively to the international debate and take direct action where required. 2 / 8 bis - central bankers'speeches in doing so, we have sought to bring our practical experience of regulating such a large funds hub, while also being an integrated regulator – with responsibilities covering both investor protection and financial stability – which means we are active in a range of european and international discussions on this important topic. last july's discussion paper represented views of both a financial stability authority but also a securities regulator. it was the culmination of significant internal debate and serves as one of the ways in which we are trying to facilitate the ongoing international discussion in this area. systemic risk and investment funds : a matter of perspective for us, it is an absolute truth that cohorts of the investment fund sector can represent a systemic risk. this is not an abstract risk, as we have witnessed episodes of stress involving parts of the funds sector. let me be clear about this : in the face of financial vulnerabilities, cohorts of funds can amplify shocks to other parts of the financial system and the real economy. this amplification follows decisions taken by individual fund managers in response to shocks. these decisions are often rational at an individual level but, when aggregated across entire cohorts of funds, can generate negative spillover effects. those decisions come from certain vulnerabilities, namely liquidity mismatch and leverage. in the case of liquidity mismatch, in response to a shock, fund managers may need to sell assets in a falling market in order to meet heightened investor redemptions. such asset disposals can amplify downward asset price movements, resulting in a spiral effect. for leverage, a shock may trigger margin calls on derivatives positions, forcing fund managers to dispose of assets to raise cash to meet margin requirements. again, these asset disposals can amplify asset price movements. as i said, these are not abstract risks. we saw these concerns play - out in parts of the funds sector during the global financial crisis, the covid - induced market shock of march 2020, and recent ldi fund issues following the uk gilt market shock. and i stress in parts because – as i'll set out later – this is a very diverse sector, and we should not be making general statements. but neither is this chain of events the result of poor

gabriel makhlouf : be an ex ante person - perspectives on macroprudential policy for investment funds opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, at the central bank of ireland's macroprudential policy for investment funds conference, dublin, 20 may 2024. * * * good morning. whether in the room virtually or physically, i am delighted to welcome you to our conference on macroprudential policy for investment funds. the conference is designed to bring together different perspectives from a range of stakeholders, and i know there are different views on this topic! this is why we have put together panels with diverse views – including policymakers from central banks, securities regulators, public decision - making bodies as well as industry representatives – to discuss key issues on developing and operationalising a macroprudential framework for such funds. for us at the central bank of ireland, today's conference is another opportunity to continue our discussions on this important topic and to debate with a range of our stakeholders. it follows the publication of our discussion paper last july. today we will hear from a number of panels covering a range of themes including systemic risks in the funds sector and considerations for developing a macroprudential framework for the sector, not least the need to strike a balance between ensuring investor protection and maintaining financial stability. i am sure we are all looking forward to hear the different perspectives and views from our excellent group of speakers. in particular, i am delighted that – klaas knot – as chair of the financial stability board ( fsb ) will address the conference this afternoon while verena ross, chair of the european securities and markets authority ( esma ), will also deliver a keynote address this morning. to set the scene for these discussions, i wanted to outline our views on macroprudential policy for investment funds, why we believe it is needed, the key objectives and guiding principles we consider when developing such a framework, as well as some of our key areas of focus. the burning question : is there systemic risk in the funds sector? before getting into the detail, it might help to start at the very beginning : why are we discussing this topic today? one of the most striking features of the evolution of the financial system since the global financial crisis has been the substantial increase in the size of the non - bank sector. the increase has been driven by the rapid expansion in assets under management of the investment fund sector. 1