 very welcome indeed. I particularly want to welcome the Governor of the Central Bank, Professor Lane. He was, as we know, appointed Governor in November of last year. And he is currently on leave from his position in Trinity College, where he's a highly professor of political economy, a chair that, of course, has had many distinguished predecessors, such as Dermot McAleese, our dear friend and colleague. The governor began lecturing there in 1997. He has a PhD in economics, which is from Harvard. He was system professor of economics and international affairs at Columbia between 95 and 97. And he has served, of course, in very many important capacities in the European system, including the advisory scientific committee of the Systemic Risk Board. His interest, his particular academic interests are financial globalization, European monetary integration, macro economic policy design, and the macro economics of exchange rates and capital flows. He has set us a new protocol today, which he commented on himself earlier. And not normally speaking, the Institute sort of closes down during the month of August, in best European style. But this was too great an opportunity for us to pass up, so we decided to host it today. It was great delight and much enthusiasm. And the astonishing thing is that there's so many people here, in a sense, that this is one of the biggest audiences we have ever had for any speaker. So I think we'll probably keep the doors open next year at the end of August in anticipation of being inundated with great numbers of people. In a certain sense, the governor has indicated that an academic style that today is a sort of end-of-term review. There have been three major publications about the Irish economy, which he will mention, and that has given him the framework in which to offer certain views. He's going to provide an overview of the macro financial challenges facing the country. He'll discuss our macro economic prospects. And of course, he's going to have a look at the implications of Brexit, for the economy as a whole, and for the financial system in particular. So it gives me great pleasure indeed to invite Governor Lane to address you. So of course, having this timing in August, it may be practiced for next year, which will be the 10-year anniversary of the start of the global crisis. So I'm sure you've got your plans for the 7th of August, 2017. So it's a pleasure to address the members of the IIEA today. As Brendan said, it's timely to provide a mid-year assessment of the macro financial environment facing Ireland, especially in the aftermath of the Brexit referendum. In addition, over the last few weeks, there's been numerous publications by the Central Bank itself, the International Monetary Fund, the European Banking Authority, and the Central Statistics Office. And all of these publications are relevant in performing a considered review of the current economic and financial challenges facing Ireland. So today, what I'm going to do is, first of all, I'll look at the provided brief overview of the Irish and European macro environment. Second, I'll outline some lessons from the IMF's Article 4 and financial sector stability assessment reports, which came out a few days ago. Third, I will discuss the recent bank stress exercises. Fourth, I'll look at Brexit, both from a macro perspective and in relation to Ireland's role as a financial centre. And finally, I will conclude by looking at the measurement issues in assessing the Irish macro financial environment. So turning first to the macroeconomic data, in relation to the broad Euro area macroeconomic environment, the latest ECB governing council monetary policy meeting on July 21 assessed that the Euro area economic recovery is expected to continue at a moderate pace. So it's happening if only at a moderate pace and in turn it's supported by accommodative monetary and financial conditions. That said, given prevailing uncertainties, the governing council will continue to monitor economic and financial market developments. And over the coming months, we concluded at the last meeting that when we have more information, including new staff projections, we will be in a better position to assess the underlying macro conditions, the most likely paths for inflation and growth, and the distribution of risks around these paths. And as you well understand by now, if warranted to achieve its objective, the governing council will act by using all the instruments available within its mandate. Now turning to the Irish economy, it is possible to filter the noisy headline data, which I'll return to later in the speech, to identify a range of domestically focused aggregate variables such as employment, consumer spending, and a suitably adjusted measure of investment to indicate that the Irish economy is performing well. Although living standards and the level of employment remain below pre-crisis levels, much of the ground last year in the crisis has been recovered over the last three years. Now even allowing for a material adjustment for the negative impact of Brexit, which again I'll come back to later in the speech, the bank's latest quarterly bulletin, which came out last week, still conditionally projects fairly decent growth rates of 4.9% this year and 3.6% next year, with the key unemployment indicator falling to 7.2% next year. Now at the same time, the legacy of high public and private sector debts and the sensitivity of small, highly open economies to international shocks, mean that there remain considerable downside risks to this central scenario. And again, the article four reported the IMF, which came out a few days ago, provides a valuable independent risk assessment, together with a range of recommendations to mitigate those downside risks, and also to support a robust and inclusive medium term growth strategy. The IMF also published its financial sector assessment report for Ireland. In turn, this is based on a comprehensive financial sector assessment program, or FSAP, which is an in depth exercise to assess the resilience of the financial sector, the quality of the regulatory and supervise the framework, and the capacity to manage and resolve financial crises. The FSAP exercise started in September 2015, and included extensive engagement with the central bank, between the IMF and the central bank, the Department of Finance, the European Central Bank and a whole range of other stakeholders in the financial system, both here and overseas. To give you a sense of the scale and scope of this exercise, the third and final mission visit in March involved 10 IMF staff on the ground in Dublin, more than 130 meetings in Dublin, Frankfurt and London, and the submission of over 300 documents, many of which were hundreds of pages long. So this is a big independent assessment of our financial sector and our regulatory environment. And the conclusion of this project and the publication last week of the assessment report is an important milestone, since it's the first such review since the crisis, and provides a timely assessment of our progress against international standards and best practice. In addition, of course, it represents a further marker of the renormalization of Ireland's relationship with the IMF. Now, the central bank welcomes the policy broadly positive assessment, which reflects the efforts of the Irish authorities in recent years to address the weaknesses in structural, regulatory and supervise the arrangements that existed prior to the crisis. The assessment of reports recognises the significant strengthening of the financial system, the major structural changes that have taken place in recent years, and the implementation of a more proactive regulatory approach. What one of the conclusions being that the authorities have been effective and vigorous in strengthening prudential regulation supervision, implementing the lessons of the crisis, and keeping up with developments in European and international practice. In relation to the supervision of securities markets, the assessment report also acknowledges the bank's leading role in the analysis of collective investment activities, which is significant and viewed as large scale and international interconnectedness of the Irish investment funds sector. Now, at the same time, the IMF has also made a number of important recommendations to increase further the resilience of the Irish financial sector and improve the effectiveness of the central bank as a regulator. We've already started to work on these recommendations in conjunction with the other Irish authorities and our European counterparts. For example, to take one issue, the bank has recently formed a new internal advisory committee on the design of domestic macro-idential policy measures, including the borrower based mortgage rules, the counter statistical capital buffer, and the famous OC buffer, which we all know means the other systemally important significant institution buffer. So in line with the IMF's recommendation to improve further the degree of public transparency in relation to our decision making processes, and in line with our own ongoing commitment to provide evidence-based explanations for our policy measures, summary records of the meetings of this new macro-idential measures committee, the MMC, will be published in due course. Another element of the FSAAP project was a stress test exercise for the banking system. The forward looking assessment of the resilience of banks to various risk scenarios is a key tool in informing supervisory actions and financial stability policies. In fact, the bank has recently participated in three such exercises. First, as part of the IMF FSAAP. Second, as part of the wider bank stress test across the European Union, led by the European Banking Authority, and the results I read came out late Friday night, and third, the single supervisory mechanism stress tests, which followed the EBA methodology and ran concurrently with it. In addition, the bank also continues to review and challenge the bank's own stress testing approaches and outcomes. So let me focus on the FSAAP and EBA exercises, since these outcomes are now in the public domain. So the IMF FSAAP bank stress test was supported by the bank's own analytical framework. Again, these adverse scenarios and stress tests are not predictive, but the FSAAP, for example, was designed to assess the capacity of Irish banks to withstand a severe but plausible scenario of a simultaneous downturn in the Irish and UK economies, characterized by a fall in property prices and a widening of sovereign spreads that, in turn, triggers increased funding costs for banks. And the exercise confirmed that the risks within the banking sector are manageable at a system-wide level. Now, not surprisingly, it also highlighted that some vulnerabilities still exist as a consequence of the recent crisis. Turning to the EBA stress tests, this is really a useful barometer to assess the health of the European banking sector and to focus on the largest banks operating in the European Union, including AIB and Bank of Ireland here. Now, relative to other member countries, the Irish banking system has experienced higher loan loss rates since 2008, we notice. Since projected credit losses in the adverse scenario of any stress test are calculated based on past experience, the capital depletion in the adverse scenario is inevitably more pronounced for Irish institutions. Stronger starting capital positions coupled with ongoing balance sheet repair has enabled European banks, including the Irish banks, to withstand a more severe scenario in this year's stress test compared to the specification of the 2014 stress test. As with the FSTAP stress test results, the primary message from the exercise is that the Irish banks, included in the EBA sample, AIB and Bank of Ireland are adequately capitalised but remain vulnerable to a downturn, especially in relation to the continued work out of problem loans and the sustainability under stress of current profitability levels. So if you take the FSTAP, the EBA and the SSM stress test results, together with additional stress testing work by our supervisory staff, these are being combined with a full risk assessment for all in-scope banks to feed into the annual supervisee review and evaluation process, the so-called SHREP, which is used to determine capital requirements and capital guidance for banks. In addition, the stress tests and SHREP inform the risk mitigation programmes which are focused on driving the banks to continue to reduce their risk profiles. As the ECB is now the competent authority for the supervision of Irish banks, the focus of our joint work includes ensuring that banks make further progress in the work out of problem loans, have credible business strategies and risk management plans in place to increase resilience to deterioration in their operating environment, including any adverse consequences of Brexit. So on Brexit, the short and medium term macroeconomic effects on Ireland of Brexit depend on several factors, most directly a slowdown in UK output growth and a depreciation of sterling against the euro adversely affect UK- orientated Irish exporters. And these factors, these two factors, UK output and the bilateral exchange rate, explain why we have materially revised our growth forecasts for 2016 and 2017. While the Irish economy has become less reliant on the UK for trade over recent decades, the UK remains an important market for many Indigenous firms, with the agri-food and tourism sectors especially exposed. Now, at the same time, it's important to put the recent depreciation of sterling against the euro into context, since it can also be interpreted as the unwinding of the bilateral appreciation that began in summer 2014. So the current rate of 80.84 is very close to the average rate between the start of 2009 and summer 2014 of 0.85. So where we are now is basically where we were for most of the time, 09 to 2014. And what's happened then is just basically an appreciation followed by a depreciation of sterling. So it's important to put it into that context. Now, at the same time, the sterling euro rate remains a lot weaker compared to pre-crisis patterns. Recall that the average pound euro rate between the onset of the euro in 2009 and summer 2007 pre-crisis was at 0.67. So, you know, the analytical framework of where we are now has a post-crisis benchmark and a pre-crisis benchmark. And how we think about the impact of the exchange rate depends on that history. Despite some initial fears, we've yet to see the operation of more powerful transmission mechanisms by which Brexit triggers a more general international decline in conference indicators and or initiates a risk-off phase in the international financial system that would involve a general repricing of risk-premia, a decline in asset values and a tightening in financial conditions. Rather, so far, the international markets have focused on the likelihood of a prolongation of low policy rates with a visible drop in the yields of many sovereign bond markets and a related reduction in bank equity values. So, while financial contagion channels have not yet been strongly operative, the gradual crystallization of the prospective new relationship between the UK and the EU in the coming months carries the continuous risk of triggering adverse market developments if a harder form of Brexit emerges as the more likely final outcome. Moreover, in view of the tight economic and financial links to the UK and the high levels of private and public sector debt, Ireland is especially vulnerable to any Brexit related reversal in international financial sentiment. Now, there's also an active debate about the implications of Brexit for the configuration of the European financial sector. The impact on the geographical producers, choices of producers of financial services depends on a wide array of factors, including the accumulated track records as financial centres, the nature of national legal and tax systems, the level of operating costs, transport links and the route of attractiveness of different cities to the families of international mobile financial workers. Since the EU has a harmonised approach to financial regulation, regulatory competition among member states should not be a driving factor in determining locational choices within the EU. This applies especially to the Euro area since the ECB-led single supervising mechanism provides a unified institutional framework for the supervision of banks. Accordingly, the bank's approach to authorising and regulating financial firms is firmly embedded in the wider European system of financial supervision. In particular, the bank has a well-established approach to authorisations in line with the practice of our continental peers. We implement our mission statement of safeguarding stability, protecting consumers, by ensuring that the applicant complies with all relevant EU and national legislative and prudential requirements. These requirements protect consumers of financial services from the potential effects of fraud or failure and assure the various types of funders of financial entities that corporate governance safeguards are robust. In addition, the stability of the domestic and international financial systems is a key focus for the bank and international regulators, with well-designed recovering resolution plans for financial firms, especially systemically important institutions, an important element in limiting contagion and protecting taxpayers in the event a firm goes bust. So the bank is committed to providing a clear, consistent, open and transparent authorisation process while ensuring a rigorous assessment of the applicable regulatory standards. The authorisation gateway forms an important part of our supervisory model based on assertive risk-based supervision in line with international standards and underpinned by the credible threat of enforcement. To ensure transparent and predictable authorisation timelines for high-volume processes, the bank publishes on a semi-annual basis its service standards in respect to processing authorisations. Coincidentally, the latest report in this series will be published later today, so you have evening reading ahead of you. In relation to unique and complex applications, the authorisation process is inevitably more layered compared to routine cases, requiring a substantial commitment of resources and the assembly of dedicated project teams with the requisite skills and internal governance processes. To deliver an efficient and robust regulatory regime, the bank has expanded its target staffing levels in recent years, subject to the capacity to recruit and retain those with the required skills and experience. Since the establishment of the single supervisory mechanism, the ECB with input from the relevant National Competence Authority, the central bank in Ireland, is the competent authority for granting banking licenses. So the assessment criteria at SSM level are detailed, rigorously applied and unaltered by Brexit. Equally, the SSM is directly responsible for the supervision of significant institutions, with Frankfurt-based personnel leading the joint supervisory teams overseeing each individual institution, such that banks can locate anywhere in the year area and receive the same supervisory treatment, and this is a fundamental principle of a banking union. Banks can go anywhere and have the same supervisory regime within the year area. Now, let me turn, finally, to the challenges involved in measuring macro-financial developments in Ireland. For the conduct of monetary and macro-dental policies, it is essential that there exist robust measures of the levels of domestic incomes and production, together with reliable ancillary measures of sectoral and international financial accounts. More generally, such indicators are also vital for fiscal analysis and many private sector decisions. The highly globalised nature of the Irish macro-financial system means that accurate implementation of UN or Eurostat manuals does not provide sufficient guidance, as is evident from the debate following the most recent CSO releases. Over time, it is desirable that international conventions in the measurement of flows and stocks of economics and financial variables are redesigned in order to avoid anomalous national statistical outcomes and provide sufficient granularity that the different domestic and external uses of national statistics can be accommodated. In the near term, in relation to measurement, there are two domestic challenges. First, I welcome the initiative by the CSO to establish a consultative group, which I will chair, that will consider inter alia the potential for the development of supplementary statistical series that may enhance understanding of the Irish economy and financial system. In recent years, the CSO has published a series of high-quality explanatory notes about the impact of multinational firms on the national accounts. It is timely to build on this work in order to construct useful alternative indicators on an ongoing basis. Second, the policy makers should take care to look through the headline data in order to develop and communicate alternative policy targets that are not affected by the various statistical issues that have been much discussed in recent weeks. So let me conclude. I've covered a wide range of topics. Still, it's possible to identify some common threads that underpin the analysis. First, we should recognize that the baseline case remains quite positive with considerable momentum supporting a broadly-based recovery. Second, at the same time, it is obvious that much remains be accomplished in addressing the adverse legacy effects of the crisis and establishing the foundations for sustainable and inclusive medium-term growth. Third, Ireland continues to be especially vulnerable to downside shocks such that policies to improve the resilience of the private and public sectors are vital. Accordingly, the management of the macro financial implications of Brexit should be underpinned by due consideration of these three factors. For the central bank, the issues identified in my speech today imply a busy ongoing work program in order to fulfill our mandate. I look forward to leading our efforts in the coming months after a short holiday and later this week. So let me stop there.