philip r lane : the european financial system after brexit address by mr philip r lane, governor of the central bank of ireland, at reuters newsmaker event, london, 28 october 2016. * * * good morning! i can think of no better location to speak about the implications of brexit for the european financial system than here in canary wharf. before i turn to my main topic, let me briefly mention a few points in relation to the near - term implications of brexit. first, while the economic and market reaction to brexit has been relatively orderly so far in the uk and the rest of the eu ( in part due to the monetary accommodation provided by the bank of england and the easing of yields across europe ), the transition towards the phase of active uk - eu negotiations that will begin in spring 2017 may trigger a more substantial re - assessment of post - brexit economic prospects. in particular, if the momentum in the negotiations is in the direction of a more severe form of brexit, this may damage consumer and investor confidence. while the effects might be qualitatively similar in both the uk and the wider eu, it is likely that the impact will be asymmetric, in view of the relative size of the uk and eu economies. second, the large movement in the sterling - euro exchange rate represents an important stabilising mechanism by which the equilibrium real exchange rate depreciation associated with the downward shift in the relative economic prospects for the uk is partly attained through a step adjustment in the currency. it also shifts the financial terms of trade, with uk owners of foreigncurrency assets enjoying a valuation gain. while incumbent foreign holders of sterling assets have suffered a valuation loss, the decline in sterling may entice new foreign investors attracted by the decline in the relative price of uk assets. finally, in relation to the exchange rate, it is important to keep in mind that the recent depreciation of sterling against the euro is in the wake of a sustained appreciation phase between early 2013 and the middle of 2015. third, the extensive linkages between the uk and ireland mean that irish economic performance is especially sensitive to shifts in uk output levels and the sterling - euro exchange rate. accordingly, the central bank of ireland has adjusted its 2017 growth forecast from 4. 2 percent to 3. 6 percent. the scale of this revision shows the material impact of brexit on the irish economy ; at the same time, the irish economy is

##u. 4 conclusion as this parliamentary term comes to an end and a new one begins in a few months'time, let me reiterate that the ecb is counting on this parliament to support these efforts with ambition and commitment. thank you for your attention. i now stand ready to answer your questions. ecb annual report 2023. 2 feedback on the input provided by the european parliament as part of its resolution on the ecb annual report 2022. this feedback statement provides responses to the issues raised and requests made by the european parliament in its resolution on the previous year's ecb annual report. the statement, which is structured by topic, serves to better explain the ecb's policies and promote dialogue with the european parliament 3 / 4 bis - central bankers'speeches and the public regarding the important issues highlighted by the members of the european parliament. the ecb has been publishing such feedback statements since 2016 following a suggestion by the european parliament. 3 ecb ( 2024 ), ecb announces changes to the operational framework for implementing monetary policy, press release, 13 march. 4 ecb ( 2024 ), statement by the ecb governing council on advancing the capital markets union, press release, 7 march 2024. 4 / 4 bis - central bankers'speeches