and overall economic activity as the year progresses. macro - financial environment 2 / 6 bis - central bankers'speeches there is no doubt that the macro - financial environment remains very challenging both domestically and globally. over the past twelve months many asset prices have fallen sharply, yields have risen, and market volatility has increased substantially. the fragility of certain markets and its participants – particularly in the non - bank financial sector – was made all too apparent by the gilt market disruption in the uk in september. the inflationary challenges are being experienced most acutely as shocks to people's real incomes and an erosion of their living standards. the profit margins of businesses, particularly the smaller businesses with less scope to pass on cost increases to customers, will suffer due to the size of their energy bills and other costs as well as falling revenues as customers reduce discretionary spending. taken together, these pressures have the potential to lead to an increase in repayment challenges for some borrowers. 3 overall, risks to the irish financial system have risen. however, there are a number of reasons to believe there is resilience in the system to meet these risks. while some mortgage customers are experiencing directly the effects of our interest rate decisions, there is substantial resilience across the mortgage market. lower levels of indebtedness, a gradual shift towards fixed rate borrowing, pandemic savings and substantial housing equity, are all ensuring that the mortgage market as a whole has significant capacity to absorb shocks. even in the sme sector, where cost increases will severely tighten profit margins for many, indebtedness has fallen continually for a decade, reducing the risk of macroeconomic spillovers between the financial sector and the real economy. regulatory priorities we continue to engage with the banking sector, other lenders, insurers and investment firms to ensure the financial system plays its proper role in supporting the economy and users of financial services. banks and other lenders in particular have a key role to play by : providing the lending and deposit services required to support a well - functioning economy ; supporting customers who may be experiencing difficulties in light of the changed macro - economic environment, including in particular customers in or facing arrears on existing loans ; and developing and implementing strategies which preserve long term sustainability and firms'capacity to continue to support the economy through this period and into the future. the financial sector continues to change rapidly, in particular through digitalisation and technological innovation. the entrance of new types of participants in the

), but also to their customers, and to the generational challenge of transitioning to a climate neutral economy. the financial sector, firms, and regulators will not be forgiven if we fail to live up to expectations. positively for the financial sector, however, another early finding from the review was that there is broad acknowledgement that the financial system has a vital role to play in supporting the transition to a climate neutral economy. a clear opportunity for you all – but also a responsibility that must be lived up to. greening the bank i spoke earlier of this being a whole of society problem, and indeed it is. as such it is not for us to focus on esg integration in the banking sector, without looking at the actions of central banks too. this cannot be a case of “ do as i say, not do as i do ”. at the central bank of ireland, we have reflected this in our most recent strategic plan which commits us to acting as a socially responsible and sustainable organisation. over the course of our plan, we are aiming to increase public trust in the bank including by progressing our organisational sustainability objectives and continuing to build on our work with our local communities and voluntary activities. 16 taking action to ensure the financial system is resilient to climate - related and environmental risks, and to embed climate change considerations across our own operations, is a key strategic priority. in implementing this priority, we have looked at climate though a number of different lens : we recently published our climate action plan, which sets out how the central bank from an operational perspective is working to meet its commitments to meaningful change. 17 in terms of engaging more strategically on climate issues, in 2022 we established a climate risk and sustainable finance forum to bring together cross - industry representatives, climate experts and the central bank. the forum is designed to promote knowledge sharing and build understanding of the implications of climate change for the irish financial system. in addition, two industry - led working groups were established within the forum to progress the topics of risk management and capacity - building with respect to climate change – and i am particularly encouraged by the enthusiasm and commitment to progress shown in the working groups. and finally earlier this year we published climate - related financial disclosures of our investment assets18, something we aim to continue to publish on an annual basis. these disclosures are in accordance with tcfd framework, and whilst the eurosystem of central banks had proposed to only require disclosure of information in the category of ‘