asset - based financing firms, peer - to - peer lenders, invoice discounters, leasing firms and other types of non - bank financiers have entered the domestic market in recent years and provide a significant potential alternative source of financing for smes. 3. credit union sector credit unions play an important role in irish society and in the financial system. the role and ethos of the sector reflect the primary objectives and purpose of credit unions - to promote thrift among their members by the accumulation of their savings and the creation of sources of credit for members'mutual benefit at fair and reasonable interest rates. our role in relation to credit unions is reflected in our statutory mandate to regulate with a view to ensuring the protection by each credit union of the funds of its members and the maintenance of the financial stability and well - being of the sector. the central bank is supportive of further development of credit union business models. the consolidation and strengthening of the sector has seen improved standards in the running of credit unions and their financial resources but further progress is required on embedding governance, risk management and operational capability. the emergence of larger and more sophisticated credit unions presents additional opportunities. credit unions are already permitted to provide “ commercial ” loans but are not currently particularly active in this type of lending. the central bank will shortly be consulting on proposed changes to the lending framework for credit unions. the proposed revisions also provide increased capacity to engage in both home mortgages and commercial lending for those credit unions with the financial strength, competence and capability to do so. should credit unions wish to become involved in a local public banking model, they will need to ensure the continued protection of members ’ funds and comply with the legislative and regulatory framework15 that applies to credit unions. i hope the above has been useful in terms of the topics that the committee wishes to discuss. 2 / 3 bis central bankers'speeches 1 department of finance and department of rural and community development report on local banking available here. 2 for further information on the role of the sme sector in the irish economy. see address by philip r. lane, governor of the central bank of ireland, at the irish small and medium enterprises association annual conference 2016, royal dublin society available here. 3 see carroll, james et al ( 2016 ) irish sme investment in economic recovery. in central bank of ireland quarterly bulletin 02, april 2016. available here. 4 see footnote ( iii ) page 88. 5 see central bank ( supervision and enforcement ) act

2013 ( section 48 ) ( lending to small and medium size enterprises ) regulations 2015. available here. 6 see sme market report 2018. available here. 7 see footnote ( vii ) page 1. 8 see footnote ( vii ) page 1. 9 see footnote ( vii ) page 18. figure 29. 10 see footnote ( vii ) page 2. figure 1. 11 see footnote ( vii ) page 2. figure 2. the wholesale, retail trade and repairs sectors includes businesses such as cash and carry wholesalers, all retail shops and also includes car sales. 12 see department of finance sme credit – demand survey october 2017 – march 2018 page 1. available here. 13 see footnote ( xiii ) page 59. 14 see strategic bank corporation of ireland, 2018 progress update. available here. 15 the credit union act, 1997 ( ‘ the 1997 act ’ ) and the credit union act 1997 ( regulatory requirements ) regulations 2016 ( ‘ 2016 regulations ’ ) set out the services that a credit union may provide to its members and the investments that a credit union may undertake with members ’ funds taking account of the overriding requirement not to put members savings at undue risk. 3 / 3 bis central bankers'speeches