the wage price spirals of the 1970s and 1980s resulted in high unemployment and emigration. in addition, this trend could worsen the impact of an external shock to the economy, such as a sharp depreciation of sterling against the euro or a sharp fall in the us stock market. private sector credit is now rising at a rate of 25 % year - on - year. the overall stock of credit has been rising to the point where it is now roughly at the european average. this growth reflects confidence in the economy, strong growth and low interest rates. residential and commercial property prices have accelerated at an alarming rate. property prices, as a percentage of disposable income, are now at historically high levels. in the context of the concern about housing costs, there have been calls for restrictions on credit growth. there is no authority to impose restrictions as we might wish. the central bank contribution is to ensure that the lending institutions have made good provisions for the rainy day. in the past year the bank has put emphasis on stress testing and we have advised the banks repeatedly to pay strict attention to risk management. we remain uneasy about the continuing upward spiral in property prices ; apart from other considerations, this generates an inflation mentality. the recent initiatives on housing taken by government are to be welcomed. i said earlier that the present rate of growth cannot be sustained. the central bank estimates that the economy could, however, sustain a growth rate of the order of 4a½ - 5 %, which is impressive by any standard. it may be feasible to maintain exceptional growth for quite some time ahead through importing labour. in view of the existing congestion levels in urban centres and the acceleration in accommodation costs, it is questionable whether our infrastructure can cope with this. besides, the longer the surge in growth, the greater the downside risks. a slowdown is inevitable in time. this can - and i expect that it will be - achieved in a smooth and orderly manner, provided there is wage and price restraint. a smooth transition will require careful management ; it may involve some erosion of our competitive position vis - a - vis our main trading partners and the objective must be to minimise this. the irish economy is one of the most open economies in the world. last year, total trade - total exports and imports of goods and services - amounted to around 160 % of gdp and this figure is expected to rise this year. expressed as a percentage of gnp, this figure would be even higher. because

##ence we are all operating in an increasingly complex environment, with a greater and greater degree of reliance on technology, an exponential growth in data, continuous change, increasingly 3 / 7 bis central bankers'speeches organisation complexity – including through outsourcing. all of these factors increase operational risk, and the need for greater resilience in our processes, people and systems. system resilience and cyber security threats are acute. risks can crystallize instantly and catastrophically. the evidence from our onsite it risk inspections is that much more needs to be done to manage this risk. for all of you, it is a question of when, not if, so you need to not only reduce the risk of occurrence but have advanced plans for how you will deal with the risk crystallising. to take outsourcing as another example, while there are strong business benefits from successful outsourcing, it does bring additional complexity into the system. it may be more difficult to get a co - ordinated response when issues arise and to get separate firms, perhaps unregulated, to operate in a co - ordinated manner during a time of stress. the firms may have conflicting responsibilities between their own stakeholders. you need to be satisfied, and to be able to demonstrate, that this additional complexity is being managed and mitigated. ( iv ) governance & risk management as i have already alluded to, we are living in an increasingly complex, fast moving and challenging world. successfully meeting these challenges requires effective leadership, governance and risk management. it is therefore of serious concern that, in too many cases, the implementation and embedding of effective governance arrangements and risk management frameworks in irish financial services firms is not sufficiently robust. more than one third of the largest firms ( prism impact high or medium high ) have significant issues, which require remediation in order to bring governance arrangements within our supervisory risk appetite. this needs to change. as does the culture in many firms – not just the retail banks. we expect institutions to critically evaluate their culture, considering what type of culture they want to develop, how staff are incentivised to behave, and to be held to account as to whether the culture they want is the culture they have and how would they know if it is not. we will also be stepping up our work from a diversity and inclusion perspective – linked to our work on culture. it will increasingly feature in our ongoing supervision and inspection work, supported by analytics