is one of the most important policy levers available. one of the trade - offs of joining a monetary union is the loss of an independent monetary policy. this trade - off increases the relative importance of fiscal policy, in addition to macroprudential policy, as a lever that can be used to mitigate country specific shocks in the way that a broad, union wide, monetary policy cannot. the fiscal position in ireland in the years after joining the economic and monetary union ( emu ) appeared favourable. the debt to gdp ratio continued to trend downward and the budget showed a surplus. however, these headline figures obscured a significant shift in the structure of tax revenues. the share of revenue collected by income taxes fell, while the share for property related taxes such as stamp duty and capital gains tax increased. xv debt to gni * - a measure which avoids the distortions encountered when using gdp - stood at 28 per cent in 2007 and peaked at 158 per cent in 2012. xvi in 2017, debt to gni * stood at 111 per cent. the adverse effects this tax structure had in the crisis years, highlights the need for a broad - based and stable tax base, rather than one dependent on windfall revenues. it also exposed that using potentially transitory revenue items to fund regular expenditure can exacerbate deteriorations in the fiscal position during a downturn. the recovery in the public finances has been dramatic relative to the situation faced during the early crisis years. significant fiscal consolidation played a large part, as did some favourable external factors, including unexpectedly positive growth and low interest costs. xvii these factors illustrate the need to strike a cyclicallyappropriate fiscal balance to strengthen resilience and build buffers to counteract future shocks. the characteristics of ireland, as an extremely open economy with significant trade and financial linkages to the broader international economy, as well as downside risks to the economy, such as brexit, add to this need. so, the second key lesson is all actors in the economy need to build resilience, be they individuals, households, corporates, banks or indeed governments. * * * lesson 3 : in addition to the level of regulatory capital, the type and quality matter turning specifically to the banking sector, whilst in ireland, aggregate capital resources of banks grew from 2000 - 2007, and banks maintained their regulatory requirements, the composition of capital changed materially. the proportion of shareholder equity in the covered banks ’ capital decreased significantly, with

made in many other areas too. my colleague ed sibley, deputy governor, prudential regulation outlined in more detail the specific regulatory and supervisory response, earlier this week. xix * * * lesson 4 : some banks will inevitably fail - we just have to be better prepared the level of public support to the banking system during the crisis in the eu was staggering. in 2009, member states provided the equivalent of 7. 3 % of eu gdp, or eur 906 billion in liquidity support and guarantees to the financial sector. ireland stands out beyond any other member state in terms of the relative support it provided following the far - reaching 2008 decision to guarantee all liabilities and deposits. beyond liquidity and support, member state governments provided capital support amounting to 4. 5 % of eu gdp between 2008 and 2012. ireland, for example spent the equivalent of 37. 3 % of gdp recapitalising its banks over the period. xx this motivated a fundamental change in how banks and authorities prepare for and manage bank failure. in ireland, as a direct response to the crisis, we introduced the credit institutions resolution act in 2011. in a european context, the bank recovery and resolution directive ( brrd ) now provides authorities with common european rules for the recovery and resolution of failing banks. when banks get into difficult financial situations, the supervisor now has a number of early intervention powers at its disposal. the brrd also requires each bank to prepare a recovery plan which outlines what it will do if it gets into difficulty. the central bank of ireland was designated as the irish national resolution authority in 2015. in this context, the bank is also part of the single resolution mechanism and we draw up firm - specific resolution plans with the aim of enhancing the resolvability of the firms. central to the brrd is that the authorities have a variety of powers to try and minimise the cost to taxpayers of a bank failure. critically, the new framework introduces bail - in tools and also aims to ensure that banks have a sufficient stock of bail - inable liabilities. this is known as the minimum requirement for own funds and eligible liabilities ( mrel ). in short, the objective of this is to ensure that shareholders and creditors bear the brunt of losses in bank failures, thus moving from bail - out to bail - in. ensuring banks have sufficient and high quality mrel goes a long way to increasing their goneconcern loss absorbing capacity. so in short, the fourth