patrick honohan : ireland – institutional indebtedness and the banking crisis opening statement by mr patrick honohan, governor of the central bank of ireland, to the joint committee on finance, public expenditure and reform, dublin, 27 march 2012. * * * although i will need to take great care in my statement to protect the financial interest of the state in view of current discussions, recognising the interest and concern of the committee to understand the various issues surrounding the promissory notes, a scheduled amortisation payment of which falls due next week, i will be glad to provide as clear an account of the matter as i can. the promissory notes owned by the irish bank resolution corporation ( ibrc ) are part of the legacy of the banking crisis. they represent just one aspect of a large and complex structure of institutional indebtedness involving the government, the banks and the central banking system, which has resulted from that crisis. although some commentators have tended to exaggerate the extent to which the tax increases and spending cutbacks which have to date been put in place in ireland can be attributed to the banking debt, this debt does hang over the economic and financial recovery of ireland and – as is generally agreed – needs to be set on a more secure basis. the promissory notes were provided by the minister for finance, using powers granted to him by the oireachtas under the credit institutions ( financial support ) act 2008, as a way of ensuring the compliance of anglo irish bank and irish nationwide building society – the precursor institutions of ibrc – with the capital requirements directives. this became necessary as a result of the losses entailed in the prices announced in march 2010 and the following months for the various tranches of nama purchases. the pace of the annual cash payment stream provided for in the notes was, from the outset, structured – perhaps somewhat arbitrarily – as one - tenth of the value of the note to be paid on march 31 each year, with the total duration of the payment stream being set to ensure the capital requirement. the notes were reset on several occasions during 2010 to reflect the progressive crystallisation of losses. interest on the value of the notes was included at the yield required by the market on irish government securities of comparable maturity at the time of each issue of the notes. it is relevant to note that the spread on ten year irish government securities above bunds immediately after the end - march 2010 pc

stefan gerlach : the central bank of ireland ’ s macro prudential policy address by mr stefan gerlach, deputy governor ( central banking ) of the central bank of ireland, to the society of chartered surveyors ireland, dublin, 15 october 2015. * * * accompanying slides can be found on the bank of ireland ’ s website : slides ( pdf ). introduction1 it is a great honour to be here this afternoon and to participate in your annual conference. i am particularly pleased to have the opportunity to talk about macro prudential policy, which promotes something that we all desire – financial stability. the macro prudential policy measures that the central bank introduced some nine months ago – that is, the loan - to - value ( ltv ) and loan - to - income ( lti ) ratios for residential property lending – have been widely commented on. i think it is fair to say that, overall, the comments have been fairly balanced – they have been criticised by some observers but supported by others, although admittedly the critics may have gotten more play in the public debate. i think it is desirable that policy measures that the central bank takes are subject to public debate. it is also fully proper that we in the central bank are asked to explain the background and rationale for the decisions that we take, so invitations such as today ’ s should be accepted eagerly. background it is perhaps useful for me to start by recalling the background to the policy measures, which were introduced to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. ireland experienced in the last decade a property boom - bust cycle of the most severe type. the aftermath has been protracted and painful. while the economy is now recovering strongly, public and private indebtedness remains very high and the return to growth is very much helped by the exceptionally low level of interest rates which help to reduce the burden of debt. one can ’ t help but worry about what would happen if interest rates rose sharply. during the boom, property prices rose extremely fast, increasing collateral values and reducing the perceived riskiness of mortgage loans. massive construction activity and heavy investment in housing and commercial property led to rapid economic growth, which reduced unemployment rates and in turn further reduced the perceived riskiness of mortgage lending. but we now know that lending standards slipped in a dangerous way during the boom. the subsequent downturn was