associated with an increase in cross - border shopping. while these are adverse forces, it is also important to point out that a weaker sterling may benefit some smes that rely on imported inputs from the uk and that real income gains to households due to cheaper imports from the uk may in part be recycled into higher spending on domestically - produced goods and services. over the longer term, the irish sme sector will have to adapt to the post - brexit environment. the current uncertainty about the future uk - eu relationship will delay many investment plans. in turn, as clarity about the post - brexit world improves, firms will have to develop new strategies to respond to the new configuration. in response to higher trade barriers between the uk and the eu, some firms may plan to serve uk customers through fdi into the uk, while others may search for new export markets. in the other direction, some uk firms may look to set up affiliates in ireland both to serve the irish market and as a platform for eu - wide trading. smes and the central bank the mission statement of the central bank is “ safeguarding stability, protecting consumers. ” the last decade has provided a painful reminder that the sme sector is especially exposed to volatility in domestic macroeconomic and financial conditions. the current work of the central bank is dedicated to improving the resilience of the financial system and mitigating pro - cyclical dynamics in credit allocation. in relation to resilience, a primary international strategy ( implemented through the work of the ecb ’ s single supervisory mechanism ) is to improve the capacity of banks to withstand shocks by fortifying capital and liquidity buffers and implementing a more intrusive supervisory model. in addition, the bank recovery and resolution directive provides a framework that will make it easier to restructure or shut down failing banks, with limited recourse to the taxpayer. as the national macroprudential authority, the central bank is also working to reduce the risk of destabilising credit cycles. in addition to the the new mortgage rules, the central bank has additional macroprudential policy instruments, including the counter - cyclical captial buffer which can be raised if there are signs of overheating in the credit system. the vigorous use of nationallevel macroprudential policy is essential for small, open economies, given the elevated exposure to external financial shocks. such measures can play a substantial role in helping to reduce macro - financial volati

is changing the whole environment. the latest phenomenon is internet banking which introduces new challenges for the regulator who must ensure that the interests of customers are safeguarded. financial institutions are concerned that there be clarity from a legal and regulatory perspective. the central bank has adopted a very positive approach towards the use of the internet as a medium to provide services ; a number of applications for licence or authorisation are being considered. our local industry is under threat from centralisation within the european union as the financial markets become more integrated. investors have a preference for larger markets with greater liquidity. up to 30 banks from the european economic area are now branching into ireland. we cannot entirely dismiss the prospect that within a few years the irish market could be dominated by foreign owned banks. competition is growing more intense ; there is a price to be paid and this is perhaps reflected in the recent closures of local branches which can no longer be subsidised. the irish banks must be cost efficient in order to maintain their position. this is the background against which the regulator must operate. a high level of professionalism is demanded. we must aspire to having the highest standards of regulation. we must keep pace with international developments and much is happening internationally. general in conclusion, may i draw attention to some figures in the annual report and accounts of the central bank for 1999. the banka€™s profits from its operations during 1999 were million. of this, million is transferred to the exchequer. at the end of last year, the bank reserves were in the region of billion. the numbers employed last year totalled approximately 650 of whom about 140 worked on supervision. full details of all our activities are given in the annual report ; i recommend this to the committee.