At our meeting yesterday, the ECB’s Governing Council cut our three policy rates by 25 basis points (or, one quarter of a percent). The disinflation process remains on track, allowing us to reduce rates. However, with some components of inflation still too high for comfort – notably, services inflation – I continue to favour a gradual reduction in rates over large moves. As policy rates fall, we should see a reduction in the costs of borrowing for households and firms. We are already seeing s...
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Governor of the Central Bank of Ireland Gabriel Makhlouf today (25 November) addressed the UK Society of Professional Economists annual dinner . Speaking this evening, Governor Makhlouf said: “Europe is at a pivotal moment in its economic development. The tangle of ageing populations with weak productivity growth raise questions about the long-term growth outlook. The need to build economic resilience to both short-term shocks and longer-term transitions become self-evident by the day. Produc...
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The Central Bank of Ireland has today (Monday 14 October) published its Flood Protection Gap Report . Some homes and businesses in Ireland are unable to obtain flood cover. This means that when a flood occurs, there can be a shortfall between the actual cost of the flood and the portion of that cost that is covered by insurance. This is the flood protection gap. The occurrence of severe flooding could and does leave households and business with high levels of uninsured losses, and may create ...
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The Central Bank of Ireland has today (Tuesday 23 July) published a Feedback Statement to the Discussion Paper on an approach to macroprudential policy for investment funds.
The Central Bank of Ireland (CBI) published a Feedback Statement on 23 July 2024 summarizing stakeholder responses to its Discussion Paper (DP11) on developing a macroprudential policy framework for investment funds, emphasizing the sector's growth and systemic risks. This matters for compliance professionals as it signals ongoing domestic and international efforts to enhance fund resilience amid rapid expansion of non-bank financial intermediation (NBFI), with Ireland's funds sector reaching €6.2 trillion in assets by end-2022. No immediate new rules are imposed, but it underscores evaluation of existing measures and future policy evolution.
What Changed
This Feedback Statement introduces no new regulatory changes or requirements; it is a summary of feedback on DP11 and CBI's perspectives on macroprudential considerations for funds. It highlights two pre-existing macroprudential measures already implemented:
Restrictions on leverage and liquidity mismatch for Irish-authorised property funds (introduced prior to 2024).
A codified minimum 300bps yield buffer for Irish-authorised GBP-denominated Liability Driven Investment (LDI) funds, requiring resilience to UK interest rate shocks, with liquid assets in the buffer and real-time notifications...
What You Need To Do
- For GBP LDI funds
- For property funds
- All relevant managers
Key Dates
18 January 2024 - Consultation deadline for CP157 on macroprudential measures for GBP LDI funds. DEADLINE
23 July 2024 - Publication of Feedback Statement to DP11 on macroprudential policy for investment funds.
29 April 2024 - Announcement and start of three-month implementation period for GBP LDI yield buffer measures.
29 July 2024 - Effective date for GBP LDI funds' minimum 300bps yield buffer compliance (three months post-announcement). DEADLINE
22 November 2024 - CBI response to European Commission consultation on macroprudential policies for NBFI.
Compliance Impact
Urgency: Medium—No new rules from the Feedback Statement itself, reducing immediate pressure, but firms must ensure full compliance with implemented LDI (by July 2024) and property fund measures while preparing for evaluations and EU-level developments (e.g., November 2024 CBI response). This matters as Ireland's funds dominance (global hub status, 16% of world financial assets) amplifies systemic scrutiny, with non-compliance risking supervisory actions under AIFMD Article 25 or future tools; proactive monitoring prevents disruptions in a €68 trillion global sector.
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The Central Bank of Ireland has today (29 April 2024) announced the introduction of macroprudential measures for Irish-authorised GBP-denominated Liability Driven Investment (LDI) funds. Building on the recent Consultation Paper “Macroprudential measures for GBP Liability Driven Investment funds”, the measures require that GBP-denominated LDI funds authorised in Ireland maintain sufficient resilience to be able to withstand a sudden and adverse shocks to UK interest rates.
The Central Bank of Ireland (CBI) introduced binding macroprudential measures on 29 April 2024 requiring Irish-authorised GBP-denominated Liability Driven Investment (LDI) funds to maintain a minimum **300 basis point yield buffer** to withstand adverse UK interest rate shocks. This regulatory intervention directly addresses systemic risks exposed during the September-October 2022 UK gilt market crisis, where excessive leverage in LDI funds amplified financial stress across markets.
What Changed
The framework establishes the following core requirements for in-scope GBP-denominated LDI funds:
*Yield Buffer Requirement
Minimum resilience threshold of 300 basis points** increase in UK yields
CBI clarifies this is a minimum floor, not a target; funds may prudently maintain higher buffers
Assets must be sufficiently liquid under both normal and stressed market conditions
*Yield Buffer Composition Rules**
"External assets" or "third-party assets" cannot be included in the yield buffer
Non-UK rate-sensitive assets included in the buffer require appropriate risk assessment and regular...
What You Need To Do
- *For Existing Fund Managers (by 29 July 2024)
- *Audit & Classification
- *Yield Buffer Assessment
- *Portfolio Restructuring
- Removal of external/third-party assets from buffer calculations
Key Dates
29 April 2024 - CBI announces finalised macroprudential framework
29 July 2024 - Compliance deadline for existing Irish GBP-denominated LDI funds authorised before 29 April 2024 (3-month implementation period) DEADLINE
Immediate - Compliance requirement for newly authorised LDI funds after 29 April 2024 DEADLINE
Ongoing - New funds seeking authorisation must notify CBI of framework scope applicability DEADLINE
Compliance Impact
Urgency Rating: HIGH
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