TITLE: Central Bank of Ireland Publishes Feedback Statement on Macroprudential Policy for Investment Funds
BODY:
On 23 July 2024, the Central Bank of Ireland published a Feedback Statement summarising responses to its Discussion Paper on macroprudential policy for investment funds. The statement reflects feedback received from stakeholders through written submissions and engagement activities, including an international conference held in May 2024.
The Central Bank outlined that the investment fund sector has grown significantly, representing approximately 16 percent of all global financial assets in 2022, up from €18 trillion in 2008 to €68 trillion in 2022. In Ireland specifically, the non-bank financial intermediation (NBFI) sector held €6.2 trillion in total assets as of end 2022, compared to €1.5 trillion in 2008, with investment funds accounting for approximately 80 percent of that growth. Ireland is now one of the world's largest investment fund hubs globally.
The Central Bank stated that while the funds sector's growth provides benefits through diversified financing sources, strengthening macroprudential oversight remains essential to ensure resilience during financial shocks. Vasileios Madouros, Deputy Governor for Monetary and Financial Stability, emphasised that as the financial system evolves, the regulatory framework must adapt accordingly.
The Central Bank's next steps include coordinating with international counterparts, including the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO), to strengthen resilience of non-bank financial institutions. Domestically, the Central Bank will evaluate implementation of macroprudential measures already introduced for Irish-authorised property funds and Irish-authorised GBP-denominated liability-driven investment (LDI) funds, while continuing to monitor the sector for emerging financial vulnerabilities.
REFERENCES:
Central Bank of Ireland. (2024). Central Bank publishes feedback statement on macroprudential policy for investment funds. https://www.centralbank.ie/news/article/central-bank-publishes-feedback-statement-on-macroprudential-policy-for-investment-funds