john hurley : financial stability report 2004 opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the financial stability report 2004, dublin, 21 september 2004. * * * general introduction i would like to welcome you to the publication of the central bank ’ s first annual stand - alone report on the stability of the financial system in ireland. the report is published in accordance with our mandate under the central bank and financial services authority of ireland act, 2003. our mandate as a member of the european system of central banks also requires us, in conjunction with the various national central banks, to contribute to financial stability. financial stability reports are an element in the discharge of this mandate. this is the fourth report that we have published on financial stability issues but up until now the analysis has been published as a chapter in our annual report. the publication of a stand - alone report has allowed us to expand greatly the depth of analysis on financial stability issues. for the first time, seven research articles complement this analysis with special attention being paid to the irish housing market and the results of the recent exercise in stress - testing of the banking system which we undertook jointly with the financial services regulator. what is financial stability? financial stability exists where the various components of the financial system ( financial markets, payment and settlement systems and financial intermediation ) function smoothly and without interruption, with each component resilient to shock. if financial institutions run into difficulties then other banks, businesses and consumers could be very negatively affected. there have been many examples of financial crises in the past in various countries that proved to be very costly in terms of economic disruption and lost growth. the primary aim of financial stability analysis is to try to identify any factors that might lead to crises in the future. this is a major task as each crisis tends to be very different from the previous one. background to the report the publication of this report in itself is a contribution towards the promotion of financial stability. it is intended to increase awareness among all the players in the financial system of the various important issues at stake to ensure the continued health of that system. there are two distinct approaches adopted in this publication ; first, to report on the current health of the irish financial system and second, to highlight the possible shocks which could hit the system and simulate, to the extent possible, the likely impact of those shocks. the nature of the exercise involved in financial stability analysis is quite distinct from the type required for the other

patrick honohan : restoring ireland ’ s credit by reducing uncertainty remarks by mr patrick honohan, governor of the central bank of ireland, at the institute of international and european affairs, dublin, 7 january 2011. * * * there is a temptation to quantify economic and financial prospects with greater certainty than is warranted. but, especially in the aftermath of events as dramatic as we have seen, this can be a big mistake. all too often in recent months, projections about the economic recovery, about the budget and about the likely evolution of banking loan losses have been provided and received without sufficient acknowledgment of the uncertainty surrounding those forecasts. but uncertainty is itself central, not only in our own assessments of future prospects, but in influencing ireland ’ s overall creditworthiness and thereby feeding back on the recovery process itself. doing what can be done to reduce the uncertainty facing the irish economy is a large part of what current economic and financial policy is about at present. today i want to focus mainly on uncertainty around the banks, but i ’ ll also touch on some other key dimensions of short - term macroeconomic prospects : employment and output growth, the budget and cost competitiveness. i want to illustrate the points with some charts which should at this stage be thought of as schematic rather than representing thoroughly precise representations of our current level of uncertainty. one great visual device for speaking about uncertainty is the fan - chart. here ( figs 1, 2 ) are two fan - charts, one for growth and one for the budget deficit. this is a better representation of what we know about what is likely to happen than a point estimate. the central paths shown in the fan - chart for growth and the deficit also correspond broadly to those presented by the institutions of the european union and the imf – and they have committed their institutional funds on the basis of their forecast that ireland is well able to service even if the full amount of €67½ billion debt is drawn. to use a word whose relevance and appositeness is more evident now than it was six months ago, they do not consider the debt position to be other than manageable. a glance at bond market yields suggests, however, that market participants are not yet fully convinced that the relatively benign central scenario is the only outcome imaginable. instead, it seems that investors in government bonds are still factoring in the possibility of what are called in the jargon “ tail events. ” take tail