likely to be as bad as the projections they have arrived at ; nevertheless, they are what is needed to arrive at a sufficient capital requirement. three factors contribute in approximately equal amounts to the additional capital. first, there are the loan - loss calculations by blackrock for the coming three years. blackrock ’ s method and approach build - in considerable conservatism and are based on an even more adverse macroeconomic scenario than used last year. second, there is the cost of asset sales and deleveraging that are mandated as part of the eu - imf programme and which reflect the impossibility of the banks ’ continuing to operate on the over - sized scale which they had reached by 2007. third, a higher minimum capital percentage has been set and additional buffers have been included to take care of any concerns regarding any other factors not taken into account in the explicit calculations, for example, post - 2013 events. bis central bankers ’ speeches therefore, while it would indeed be appropriate to make some upward adjustment in the central estimate of future bank losses from what was envisaged in previous announcements last year, i would emphasize that that is not the focus of today ’ s announcement. the scenarios and modelling being used are not intended to provide forecasts of what will happen. indeed, the thrust of the banking policy – including the other announcements of the financial measures programme which will be made by the government today – is to seek to ensure that the banks, their customers, and the nation in general get out of this situation with much less cost, distress and dislocation. the central bank ’ s forecasts for the economy are much more optimistic than the stressed scenario used. now i will hand you over to matthew elderfield for more of the details. * * * the financial measures programme will create a sustainable irish banking system through a process of recapitalization, deleveraging and reorganization. the additional capital requirements announced today provide for future loan losses over the coming three years on a scale that is unlikely to occur and provide for an additional buffer for subsequent events. enough capital is also being provided to cover the unavoidable losses involved in needed asset disposals, even though there will not be fire - sales. the assumptions that have been used, the methodology blackrock has followed and the capital percentage targets the central bank has set together provide an exceptionally conservative basis for recapitalizing the irish banks. the data assembled in this exercise has been published to enable independent analysts to see the

in a market based economy and the central bank wants to see that the people of ireland, europe and the customers you serve around the world are well served by a well - functioning system. for you, a leadership challenge is to be able to balance the many competing demands your business faces - to remain competitive and profitable, to meet the needs of your customers and our regulatory requirements, and to transform so you too are fit for the future. for us all, it is a real and constant challenge to keep pace with the changing environment. while we will not always agree on a diagnosis of a problem, or indeed the solution, we are facing many of the same challenges, and sometimes the same risks, but from different perspectives. i really believe that working together we can better meet these shared challenges and deliver a financial system that is trusted, stable and operates in the best interests of consumers and the wider economy. thank you. 1 with thanks to conor o ’ shea, steven cull, micheal o ’ keeffe and tony cahalan for their assistance in preparing this speech 2 see imf world economic outlook october 2022 3 see qb 4 2022 for note on modified domestic demand 4 see eurostat euro area annual inflation and its main components. 5 see cso consumer price index september 2022 see sharon donnery " inflation and labour market dynamics after the pandemic ", 10 november 2022 7 see philip lane the transmission of monetary policy 11 october 2022 8 see ecb financial stability review november 2022 9 andrea enria better safe than sorry : banking supervision in the wake of exogenous shocks 4 october 2022 10 see ft article " the crypto world must be made safer for investors and users " 11 november 2022 11 central bank of ireland - our strategy 12 see mortgage measures framework review see the central bank's framework for macro - prudential capital 14 see consumer protection code review - discussion paper 15 see ed sibley - innovation in financial services : a regulator ’ s perspective, 29 november 2019 see the central bank ’ s regulatory philosophy : regulating for stability and positive outcomes, 2 november 2022 17 see the central bank ’ s regulatory philosophy : regulating for stability and positive outcomes, 2 november 2022 sharon donnery high priests and politics : building public understanding through changing central bank communications - 15 november 2017 ©2022 central bank of ireland