to a potentially disastrous chain reaction of failures. minimizing systemic risk in payment and settlement systems is not only an objective in itself. it is also a precondition for achieving financial stability and for the efficient conduct of monetary policy. these, in turn, are necessary for the integrity of the euro as a major global currency. our oversight role is enshrined in both domestic and european legislation. domestically the legal basis is the central bank act of 1997. in the broader european context, one of the basic tasks of the european system of central banks ( of which the bank is a member ) is " to promote the smooth operation of payment systems ". the eurosystem is further empowered " to ensure efficient and sound clearing and payment systems within the community and with other countries ". back in the early 1990s, central banks focussed on large - value netting systems where the safety concerns were more evident. gradually, however, the focus of oversight has been extended, to varying degrees in different countries, to : • real - time gross settlement systems, • retail payment systems, • payment instruments such as payment cards, direct debits and credit transfers, • third - party service providers, • central counterparties, and • securities clearing and settlement systems. the extensive range of activities now subject to oversight reflects their potential impact on financial stability and their links to the smooth conduct of monetary policy. central banks are organised so that their operational role in payment systems does not conflict with their oversight role. the bank currently directly oversees the irish real - time gross settlement system, iris, and the two retail payment systems concerned with paper and electronic clearing. in doing so, it applies the provisions of the central bank act, 1997 that require all payment systems operating in the state to be approved, and have their rules vetted, by the central bank. in approving any payment system's rules, we must have regard to the "... proper and orderly regulation of the payment system concerned and of competition between payment systems... ". in assessing the soundness of these domestic payment systems, we use as reference the internationally recognised principles developed by the committee on payment and settlement systems of the central banks of the g10 countries. in addition to these direct arrangements, the central bank is involved in a number of co - operative oversight roles. thus, in relation to the target system, which interlinks all eu euro - denominated real time gross settlement systems, we participate in the eurosyst

john hurley : protecting the stability of the irish financial system statement by mr john hurley, governor of the central bank & financial services authority of ireland, dublin, 3 october 2008. * * * the government decision to guarantee depositors in and lenders to irish financial institutions was taken to protect the stability of the domestic financial system. it does this by supporting the irish banking system ’ s ability to secure access to funds both domestically and internationally. the government ’ s decision was taken after close consultation with the central bank and financial regulator. for over a year now, the central bank has been monitoring the disruption in international financial markets. this was triggered by difficulties in the us subprime mortgage market and resulted in a protracted drying up of liquidity in a range of markets. despite central bank actions, both at eurosystem and global levels, to inject liquidity to improve the functioning of money markets, these markets have become increasingly impaired. the net effect was that banks internationally found it difficult, and expensive, to obtain term funding. the access of the irish banking system to term funding was affected in a similar way to their international peers. the pressures became particularly acute during recent weeks following difficulties in state - sponsored financial institutions, investment and high - street banks both in the us and then europe, and over the last weekend the failure to pass the us legislation. these events came to a head last monday evening when the supply of funding to the irish banking system was seriously threatened. at that time, i had to inform the minister that the risks to financial stability were becoming unacceptably high with knock - on effects for the wider economy. a major consideration was that the highly concentrated nature of the irish banking system created a high risk of contagion. decisive action to protect the stability of the economy and its financial system was needed. while the decision was difficult, it was aimed at ensuring renewed access to funding for irish financial institutions. the irish banking system, unlike many of its international peers, has not to date had to write - off significant losses on loans and investments so that bad debts and loan losses were not the key issues for our financial system last monday evening. the issue then was the unprecedented shortage of liquidity in financial markets and the urgent need to implement a solution that targeted that issue directly. the legislation giving effect to the government ’ s decision was signed into law yesterday. over the coming days, the central bank together with our colleagues in the financial regulator will be advising government on how the