sharon donnery : the departure of the uk from the eu – implications for the irish economy and financial system internal dinner address by ms sharon donnery, deputy governor of the central bank of ireland, to visiting staff from other central banks, dublin, 5 march 2019. * * * introduction first, welcome to dublin! it is a great pleasure join you this evening. 1 the departure of the uk is particularly important for us in the central bank of ireland given : the significant trade and investment links with the uk mean that the irish economy is more exposed to the risks from the uk ’ s departure than any others, apart from the uk ; the largest domestic irish banks have very substantial uk exposures and any deterioration in the uk economy could impact on their asset quality ; dublin is one of the small number of european capitals that is likely to see considerable inward investment of financial sector firms, which will significantly affect the size and complexity of the financial system here ; in policy fora, ireland will lose a close ally on certain issues ; and uk firms passport into ireland across a range of sectors including insurance and payments services, for example, and for consumers there will be implications when this is no longer possible. therefore, in this context, in my remarks this evening, i will first take the opportunity to outline the broad approach we have taken in the central bank in our preparations. i will then go on to discuss some of the contingency planning and outline some specific areas where public authorities have had to take action. third, i will outline the structure of the irish economy and discuss some of the more macroeconomic aspects to the departure of the uk. i will highlight some of the channels through which a no - deal / no - transition outcome would affect the economy here in ireland. finally, i will conclude with some thoughts on life after the uk ’ s exit for european authorities. our broad approach in addition to our national central banking functions, the central bank of ireland also acts as national competent authority for the supervision of credit institutions, investment firms, and insurance firms. the central bank is also the securities and markets regulator and the national financial conduct authority, as well as being the national macroprudential authority and national resolution authority. given this wide range of mandates, we must look at economic and financial sector issues in a holistic fashion, and this is particularly the case for brexit. this means analysing the macroeconomic effects and addressing possible financial stability implications, ensuring firms across the whole financial system are

prepared, and minimising the potential impact on consumers. the international nature of the financial sector here means we cooperate closely with our european partners : not just the ecb and single supervisory mechanism ( ssm ), but also the single resolution mechanism ( srm ) as well as extensive engagement with the european supervisory authorities ( esas ) : the european banking authority ( eba ), the european insurance and occupational pensions authority ( eiopa ) and the european securities and markets authority ( esma ). 1 / 8 bis central bankers'speeches we consider the work we undertake on international engagement to be of such importance that it is one of the five strategic priorities in our three year strategic plan we launched earlier in the year ( the uk leaving the eu is another ). 2 broadly speaking our work on the uk leaving the eu has focused on four key areas. these are ensuring that : 1. risks to the irish economy and consumers are understood ; 2. regulated firms prepare appropriately for all scenarios ; 3. where necessary, the required policy and legal adjustments are prepared to counteract the cliff - edge risks of a hard exit to the delivery of vital financial services ; and 4. we perform our gatekeeper role in a robust and efficient manner for new firms seeking authorisations or existing firms revising business plans. 3 to meet these objectives, we established a task force in 2016. more recently a steering committee was set up to oversee the final stages of the central bank ’ s preparations for cliffedge risk mitigation. in line with our commitment to transparency, the reports of the task force are regularly published in redacted format. 4 we have made every effort to ensure that the financial system has the necessary level of resilience to avoid financial stability risks in the event of a no - deal scenario. our preparations have involved a significant amount of engagement with financial firms and this has focused on ensuring that all necessary steps have been taken to mitigate the risks to their customers and businesses from the uk ’ s exit, with a particular focus on a disorderly scenario. the scale and complexity of the irish financial system has already changed considerably as a result of the uk leaving the eu. work dealing with the authorisation or extension of business for over 100 firms has required the central bank to substantially increase our workforce as well as prioritising and reallocating our existing resources to ensure that we took decisions in an effective, efficient, predictable and timely fashion. the central bank does not view the authorisation