 So, good afternoon again. I'm very pleased to welcome you all to the latest IIEA webinar. My name is Frances Roulan. I'm a member of the Institute and it's my honour to chair the session today. We're delighted to be joined by Sharon Donnery, who's the Deputy Director of the Central Bank and who's been given very generously of our time this afternoon to come and talk to us again. She's done this before at the IIEA and it's very good to welcome her back. Her talk is going to be entitled Risks, Resilience and Policy Response to COVID-19. So, she'll speak to us for about 20 to 25 minutes and then we'll go through Q&A with the audience. You'll be able to join the Q&A discussion by using the Q&A button on the machine to take questions. We collect those during the talk and then we'll have them answered as many as possible by Deputy Governor at the end. A reminder for you today is that the presentation and the Q&A are both on the record. So, on the record as opposed to a child under Chatham House rule. So, please feel free to join the discussion on Twitter using the handle at IIEA. So, let me formally introduce Deputy Governor Donnery and then hand over to her. So, Sharon was appointed Deputy Governor of the Central Bank in March 2016. She's an ex-officio member of the Central Bank Committee and is the Governor's Alternate at the Governing Council of the ECB. Within the Central Bank she's responsible for leading the financial stability, economics and statistics and financial operations directors of the bank. She's also the Chair of the ECB Budget Committee, having been appointed by the ECB Governing Council in December 2016. So, Sharon, great pleasure to hand over to you. So, thanks a million. Francis, and good afternoon everyone. It's lovely to be back at the Institute again. I really appreciate the invitation. It's also really lovely to see you, Francis, if only virtually. As people on the call, I'm sure now you were one of the first female economists at the Central Bank and I think your career research, particularly on the Irish economy and the policies needed for us to prosper in this increasingly globalised world, will no doubt offer some really interesting insights today to what of course are unique times. As Francis said, I'm going to speak today about the macro-financial environment in Ireland amid COVID-19. So, I'll address the risks to Irish financial stability, both domestic and international, the resilience of our economy and the financial system and some of the recent policy responses that we've taken at the Central Bank of Ireland, along with our colleagues in Europe. So, I think the key message is that while we've built up resilience in the financial system over the last decade, we've only seen the initial effects of the pandemic so far and there remains significant uncertainty about the path of the virus, the duration of the shock that we're experiencing and the economic implications. So, ensuring our policy responses really support a sustainable contribution from the financial system so that it can absorb and not amplify the shock of COVID-19 will remain to the forefront of our minds at the Central Bank. So, I do have some slides also to use today. I'm going to share those now and they'll be available on the Central Bank website later on along with my remarks if anybody wants to have a look at them. So, if we turn to the second slide, I suppose I'll start by saying what many of us know already that COVID-19 is fundamentally different in nature and scope to previous economic shocks, certainly in my living memory. First, it's truly global. So, unlike the 2008-2009 financial crisis, when some emerging markets acted as a form of engine for growth, today the pandemic is affecting all four corners of the world and the World Bank reports that it's in the deepest trough since World War II and it's also the most synchronized since records exist. The OECD in the last few days has warned of the worst peacetime recession in a century and their latest numbers in a single wave scenario estimate global economic activity to fall by six percent this year. In contrast, at the peak of the financial crisis global growth fell by 1.7 percent and at the end of May over 100 countries had requested emergency financing from the IMF which is an unprecedented number. So, on the next slide we'll see that also the size and speed of the shock is also unprecedented. So, in February, for example, less than one in 20 people in the Irish labour force were unemployed but by May over one in four were out of work when we take into account those receiving the pandemic unemployment benefit. Thirdly, the speed of the effects itself on the economy presents a real challenge to policymakers given that key official indicators generally come with a lag. So, a business cycle indicator for the Irish economy developed by some of my colleagues at the Central Bank offer a more timely assessment and you can see in the chart that this indicator fell to an unprecedented low in April and it was almost twice as low as the trough of the financial crisis in 2008 and 2009. So, the severity and the steepness of this drop suggests that the initial economic effects of the pandemic are worse than the last crisis and of course it remains to be seen how these effects persist as the economy is slowly reopening and businesses, workers and policymakers learn to live with COVID-19 over the medium term. Now, I spoke here at the IEIEA last year also and at that time I pointed to the uncertain path ahead for the Irish economy. There were clouds on the external horizon and that contrasted with then the potential for domestic overheating. Today, uncertainty stems from the path of the virus, the ability of the global public health efforts to suppress and to manage it and how these efforts are intrinsically linked to the level of economic activity. Looking at a range of forward-looking measures, there's been an enormous increase in economic uncertainty, greater even than we saw during the financial crisis, and in this uncertain environment, swift, decisive and credible policy action can provide some certainty. So, you'll see on this slide some of the risks and that there has been an abrupt and severe deterioration in the macro financial outlook in Ireland. The collapse in global economic activity also has the potential to trigger long identified risks to financial stability. So, if we turn to the next slide, you'll see that this collapse in activity, one of the ways through which it poses risks to financial stability is through possible defaults and the duration of the shock will largely dictate whether short-term liquidity issues ultimately in turn become solvency issues for households, businesses and by implication parts of the financial sector. In addition, for example, our recent property survey along with the SCSI reports a median expectation for falls in property price valuations while the ECB's bank lending survey also reports expectations of reduced demand for some forms of credit. Now, also in terms of financial markets, the shock has led to a repricing of risk premium with large falls in risky asset prices and tighter financing conditions globally. On recent research, which you can see referenced on the right here, shows that Ireland is particularly sensitive to tightening in global financial conditions and this of course has implications for domestic lending, asset prices and economic output. Now, on the next slide you can see that of course in response to the shock governments around the world have significantly and I think importantly necessarily increased spending to support their economies. This, as I said, has been necessary both to support affected households and businesses but also to minimize the long-term damage of this shock to the economy. However, it does bring risk over the medium term with higher public debt levels. Hiding to public debt issuance, for example, could put pressure on government bond yields in some euro area countries and while sovereign yields remain low in Europe, this is of course against the backdrop of an incomplete financial architecture. Turning to the next slide, we can see that the macro financial risks of possible defaults, these rising risk premiums, these tightening financial conditions and increased debt burdens are coupled with structural vulnerabilities that we are also exposed to in Ireland being a small open economy. And I've spoken previously about the issue that you can see here in this slide about how our macro indicators tend to have higher highs and lower lows than other countries. Our open economy is much more sensitive to global developments and the smooth functioning of global value chains, the health of the US economy, the presence of multinationals in Ireland are all factors that affect our output and our household incomes. And of course this comes at a time when other risks have not disappeared. The ongoing uncertainty surrounding the Brexit negotiations, for example, is a serious concern and we'll focus on this in our next quarterly bulletin which is due to be published in July. Other longer-term risks like the financial stability risks arising from climate change and de-globalisation have also not gone away and crystallisation of these risks would further test the resilience of the economy and also the wider financial system. So let me turn now on the next slide to that resilience of both the economy and the financial system. I think a really important positive is that the starting resilience of households and businesses and indeed the domestic banking system is significantly stronger compared to when we went into the onset of the 0809 financial crisis. Since then of course the Irish banks have been delivering substantially and in recent years the government has been reducing external net debt liabilities. So on the eve of the COVID-19 crisis Ireland's overall external balance sheet vulnerabilities were relatively limited. However on the other hand the scale of the shock is unprecedented and I think we have only seen the initial effects. The full implications for households, businesses and the financial sector will only emerge over the coming months and years. Now on the next slide we can start looking at some of the effects on businesses. So for example cash flow or liquidity is one of the main concerns for businesses with about half of large corporations holding less than 8% of their annual turnover in cash and half of SMEs holding less cash and also SMEs having less access to undrawn credit than their larger counterparts. So while the government has stepped in to provide support in the form of wage subsidies and the deferred of tax liabilities for example and the banking system has provided liquidity via payment breaks and lending the risk remains of liquidity issues turning into solvency issues for some firms and as with all facets of the crisis the extent of this will depend on both the path and the duration of the virus. So the severity and scouring are likely to differ across sectors and regions and so I think careful analysis and subsequently targeted policy will be really critical. Households are also in a much better financial position than on the eve of the global financial crisis with lower debt burdens. They have a higher ability to service that debt and are more resilient to falls and house prices. Payment breaks have of course provided some breathing space for those who are hard hit and it's a key way in which the banking system has been easing liquidity strains on the household sector. However of course some borrowers may continue to experience difficulties when their payment breaks expire and in such cases the bank has been clear that it expects lenders to ensure appropriate solutions including forbearance are available. Now my written remarks I expand a little further on our thinking on payment breaks which I won't dwell on here. Suffice to say I think that we are carefully supervising this process to ensure that our expectations are being met. The resilience of borrowers though of course is intertwined with that of lenders and banking crisis cast along the shadow especially those that have been fueled by credit. So avoiding such a scenario is therefore a parliament so lenders can ease or amplify economic crisis so their resilience is central to minimizing potential scarring effects. If we look at the next slide you'll see that through steps taken in recent years the domestic banks are more resilient than they were in the past. The capital requirements that were imposed on them have ensured that they are better prepared for economic shocks like the one that we face now. In addition their lending practices have been more prudent in recent years than in the run-up to the financial crisis and they are able to rely on capital buffers to absorb losses and of course to continue to lend to the economy. On the next slide though we'll see that the banks do have significant exposures to the sectors that have been most affected by COVID-19 and of course their profitability has fallen in the run-up to the pandemic. So in other words the resilience of the banks is not unlimited the banking system is expected to make losses the scale of which will depend on the evolution of the virus and the scarring effects of the crisis. Now thinking beyond domestic resilience if you look at the next slide you'll see some of the interconnections of the financial system in the time of this global crisis which also have a significant bearing. The investment fund sector globally for example saw large redemptions in March and the subsequent dash for cash especially dollars put significant pressure on other markets, markets that had previously been seen as both safe and liquid. So this tightening of global financial conditions was partly mitigated by large central bank interventions. Over time though I think the question to the extent to which structural vulnerabilities from liquidity mismatches and leverage in the global fund sector contributed to market disruption will need to be addressed. So let me turn now to policy responses on the next slide which have been both domestic and global. I think over the last three months what you've seen is a range of fiscal, monetary, macro-predential and micro-predential policy actions and these have really been designed to support households and businesses through the crisis so that the financial system can best absorb but not amplify the shock. Governments worldwide have introduced fiscal policy with common features being things like household income supports, business loans and guarantees and while fiscal policy is crucial to ease the effects of the crisis monetary policy can also ensure that the cost of borrowing remains low but in understanding the important differences between these two policy spheres I think Chairman Powell of the Federal Reserve captured it well when he said the Fed has lending powers not spending powers. Central banks have conducted monetary policy to maintain liquidity in the financial system to support the flow of credit to the read economy and to prevent a tightening in financial conditions. Central to our pursuit of price stability the aim of our monetary policy has been to ensure the continued supply of credit to the economy through the crisis and of course to aid the recovery from the shock. As a member of the euro system the central bank of Ireland has also been central to this response by the ECB and the euro system. Now as I mentioned earlier the resilience of the banking system has been enhanced over the last decade. Both macro and microprudential policies have resulted in increased capital and liquidity offers to be used precisely in a crisis like this. So to echo my colleague Sir John Connliffe of the Bank of England while building resilience in the financial system in good times might seem expensive it's the better economic bet over the long run. On the next slide you'll see some of the policy responses at the bank including for example the reduction of the counter-cyclical capital buffer which we reduced from 1% to 0% and this release freed up approximately 940 million euro of capital across the domestically relevant banking sector. The OC buffer can also be used to absorb losses in times of stress and consistent with EVA guidelines the central bank has been clear that credit institutions should not pay dividends for the financial year 2019 or 2020 until at least the first of October 2020 and should also refrain from share buybacks aimed at remuneration shareholders. The mortgage measures which have built both bank and borrower resilience since their introduction in 2015 and I think it's fair to say that we're seeing the benefits of these in a period of stress like that we are experiencing today. So today over one quarter of the stock of lending is within the scope of the measures and people will recall that the measures have two objectives to strengthen both bank and borrower resilience to negative economic and financial shocks and also to prevent the reemergence of a credit price spiral. Now all these measures aim to reduce the risk of a credit crunch I think it's in the interest of borrowers and lenders alike to maintain the supply of credit in a sustainable manner. Former Governor Lane now an ECB executive board member noted last week that the ECB is determined to make sure that the crisis is not made worse by an avoidable credit crunch. So to conclude on the last slide I think reflecting these words and actions of central banks and regulators all around the world in the central bank of Ireland we're working to ensure the financial system can best absorb and not amplify the poll all out from the pandemic but the initial effects of this exceptional shock of materialized the banking and financial system have withstood the initial pressures. The system of course has benefited significantly from the painstaking and globally coordinated efforts by policymakers and regulators to build up resilience over the last decade. On the eve of this crisis the financial system was stronger than a decade ago but its resilience is not limitless and its continued stability is heavily supported by policymakers worldwide. I think the full effects of the crisis will emerge over time as the damage and scarring to sectors is realized and the extent of that depends on the path the persistence and ways of the virus and the necessary public health responses. Many thanks again to the IIEA for the invitation and for your attention and I look forward to the questions. Aaron thank you very much indeed for that very lucid presentation and I just want to encourage everybody to start in their questions for the Q&A but let me begin by one which as we're looking back you were around for the 2008, 10, 11, 12 crisis and how well do you think that the the institutions are operating on this occasion relative to the other previous occasion in terms of the sense you have been watching what's actually happening on the ground within the EU but even within Ireland and you make a point under your discussion of resilience that we need to be you know have more targeted policy and I suppose my link on question to that is are we getting better at targeting? Have we actually got enough information and analysis done now to allow us to do the kind of targeting that we'd wish to do to be effective? Thanks Frances so I think I mean first it's important I think to emphasize a couple of the points I made there in the remarks it's very very different this time so the financial system was actually at the center of the causes of the crisis the last time whereas this obviously is coming from a public health dimension and starting with the real economy and feeding in to the financial system so I think that's an important difference and it's nature though I think across the entire financial system is also quite different and so I mean I'm sure people are watching some of our commentary and analysis over the last few weeks and months but you know there are issues to do with the insurance sector there are issues to do with the banking sector credit unions etc whereas the previous crisis certainly in Ireland was very much focused on the domestic banks I think much has changed since the previous crisis in terms of our framework and you know the powers that we have at the central bank the ability that we've had over the last number of years to look at some of those things like building up resilience our approach but also the approach globally to supervision and the amount of data and analysis that we have in central banks now and regulators to kind of understand what's going on so I think it's a very different environment and on your point about targeted policy I mean I think it's always the case for public policymakers that we should be aiming to make sure that our policies are targeted and effective I think particularly so when we have a shock on the scale and breadth that we have at the moment again I certainly think that many of us and not just the central bank but it kind of the wider public service in the Department of Finance in Ireland and also internationally you know there's a lot better data there's I think better understanding of some of the issues the interconnected nature of Ireland globally for example and in Europe I think we've also seen some benefits in terms of the way the ECB has been able to act quite swiftly but of course as I mentioned there are my remarks and at European level you know the architecture is not fully complete we've made some progress on banking union for example but it's not concluded and there's still a lot of debates about progress on capital market capital markets union and so on and so while there has been progress I think there is more work to do and not just about the pandemic but about that sort of architecture of the European institutions and so on I think maybe the last thing I would say is about this policy coordination so I suppose sometimes in the past you would see maybe an absence of policy coordination but I think in fairness globally at European level and even domestically you know there have been a significant fiscal response a significant monetary policy response macro and micro potential and I think they have been designed in a way to be mutually reinforcing and complementary and I think the ECB has been very clear since this emerged that at a European level that kind of coordinated fiscal response is very much necessary Councillor from DCU has asked the following question would it make sense for the NTMA to issue very long government bonds in the current context? Well I mean I think the first thing I have today is you know the NTMA in general does a really good job of managing the debt we work quite closely with them obviously and in the bank in a number of different causes including for example on the financial stability group which is the kind of state architecture for looking at some of these issues and I think it's clear that we have a very low interest rate environment at the moment which I think is an important backdrop for the kind of size of the fiscal response it's going to be necessary and for the debt issue it's going to be required and I think we've been saying in the bank and I mean for some time but also particularly recently that we do have to have a regard to the more medium term and longer term sustainability of that debt and so I do think there are benefits of course to issuing debt longer term but low interest rates and I think you know all of those issues I'm sure are on the mind of the NTMA and thinking about how they manage our debt over the coming months and years. Okay so let me say another question and could I just say when people are sending in questions I should have said so at the beginning just give you a name and institution as well as the question please. Mary Farrell from ECPR has asked the question what is the most appropriate balance between fiscal and monetary policy to counter the effects of the pandemic? Yes so I think we've been clear about this on the ECB have been clear as well but you know monetary policy can't be to use that famous quote the only game in town and the reliance cannot be on kind of monetary policy to be a the first order of effect the type of supports that are required you know some of which I described there and in my remarks in terms of providing support to those who are maybe unemployed or the wage subsidy schemes the supports that SMEs need in terms of you know the potential for grants, waivers of tax liabilities and so on are clearly those that fit very much in the realm of fiscal policy and we have been clear I think that that has been a very necessary response and I mentioned what Jay Powell the chairman of the Fed said there in recent days in terms of you know central banks having lending powers not spending powers I think it's a really good way of thinking about it so of course we can provide supports to the economy we can provide liquidity through banks and we can make interventions like quantitative easing and so on which obviously affects interest rates but the kind of direct transfers that have been needed through fiscal policy like the pandemic unemployment benefit the supports that are being provided to SMEs and so on obviously have to come through the fiscal system so I think there are kind of differences in terms of the types of support that need to be provided and this is certainly a case I think where that fiscal support has been necessary back to your own question earlier on though Francis I think we've also been clear that it needs to be targeted and effective clearly we're incurring you know very significant levels of public expenditure and so on and we need to make sure that they go on the right things and they provide the right sort of supports and so on to the right sectors or to the right people or businesses or companies that need that support another question is in Alan Duke's former minister for finance and the question is as follows and Sharon say how much ECB originating liquidity has flowed through the Irish banks to businesses and at what interest rates yeah so I think the ECB and ourselves I mean we implement that policy here you know that the lending that's decided on by the governing council so that the ECB can lend on to the banks is obviously operationalised by the central bank of Ireland here locally and we have a number of standing facilities that predated the pandemic of course that were always in place and as part of the kind of unconventional monetary policy that we've had over the last number of years and we've had so-called targeted long-term refinancing operations where banks can borrow over a slightly longer time period and at lower interest rates if they meet certain benchmarks at certain levels of lending on into the real economy and then that's been supplemented by a dedicated facility for the pandemic and which has sort of more favourable terms and conditions from the point of view of the lending to the banks. The Irish banks I suppose are slightly different maybe than some other banks in Europe and this goes to the kind of some of the changes that have been made since the financial crisis and one of the issues in the financial crisis was of course that they were heavily exposed to funding internationally that would have been kind of flighty funding that would leave the banks when they came under strain and they've changed I suppose their approach to their own funding and they're therefore a lot less dependent on liquidity from the central bank so while we have a number of operations kind of available for the domestic Irish banks there wouldn't be significant take up of those facilities because they have their own funding sources either directly from the market or through their deposit base so we are maybe slightly different in that respect than some other countries but those facilities are obviously always there and the target long-term refinancing operation the terms and conditions have quite recently been changed and the pandemic and refinancing operation is quite new so I suppose it remains to be seen whether there's further take up of those over the coming months by the Irish banks. Okay so a question in now from a former boss of yours Patrick Owen is a former central bank governor who is now at Trinity Answer Peterson Institute would Sharon tell us a bit about the operations of the central bank and the ECB during the shutdown to what extent is it easier does it turn out to be easier hard to do things remotely? I guess as organizations there's a very big building with the major centres of you any any perspective you'd like to share with us on that. And well Governor Hone himself was quite instrumental in kind of enhancing our ways of working at the bank as he knows and a very big part of the practicalities of our move to North Wall Key was a significant enhancement of our technology actually and I have to give full compliments to our kind of operations team our IT staff and so on and which has meant that the bank is essentially fully functioning and mostly remotely we have a small number of of critical staff in really critical functions and so on that are still in the building and we obviously have to and distribute cash and so on for example and I have to say that has been the case across the euro system also the case of the ECB and I think it highlights the importance actually of operational resilience so when we talk about financial stability in the bank you know we're often asked about the capital position of the banks and the resilience from a financial position which of course is critical and but I think it's also become clearer over recent years especially as technology becomes more prevalent in the payment system and so on that operational resilience is also quite critical and that has been really tested over the last number of months not just for central central banks but for the financial system as a whole it's an area we've been looking at quite carefully over the number of the last number of years but I would say in general it has probably proved easier to operate than we would have expected especially given the length of time I mean we've had previous incidents like storms and so on without the office for a few days but to be out of the office in such a sustained way is clearly very unusual we are of course although also talking quite a lot to firms about their own plans their business continuity plans their operation resilience as well and whether that's how they interact with customers but also their kind of ability to interrupt interacting financial markets and so on and we're very conscious I think of cyber security risks and so on and thinking about some of those issues which I think people on the call would probably be aware have increased significantly there you know there have been quite a number of and you know a big increase in the number of cyber attacks fraud scams things like that so I think we do also have to be alert to those Sharon can I come back in with the question by waiting for my colleagues online to send in some more because I have a lot of issues raised but I was just wondering whether the experience of the global financial crisis has put banks and I guess related institutions banks in particular in a better place for dealing with businesses and house houses this time around there's a lot of criticism at the time about their ability to actually manage if you like their client base do you have a sense that that's in a sense about experience of having been through one crisis so a lot of the people on the ground have actually been there before in a different shape and what is intense previously but what do you think this time yeah so I think I mean one of the critical challenges at the beginning of the global financial crisis let me start with Ireland first maybe was the inability of the banks to actually cope with the emergence of arrears and non-performing loans from an operational perspective never mind from any other perspective in terms of the kind of financial consequences of provisions and the effect on capital and so on and we saw that very much in the banks and you know during the program for example the Troika program and some of the supervisory work we would have had to do in the early days following the emergence of the crisis I mean it required I think a level of intensity and engagement with banks that was quite surprising just because of their poor operational capabilities and I was asked to chair a European group subsequent to that and that looked at non-performing loans all across the euro area that group has been set up by the ECB following the introduction of banking union and the sort of collective approach to banking supervision now in the eurozone and I was actually really struck at the time that this operational issue was quite prevalent actually there were a number of countries that had similar experiences and one of the things that we did at the ECB was set out kind of practices guidance or expectations for firms about how they would deal with these issues and if they were to ever emerge again in the future and I would have to acknowledge I think that the banks have you know significantly enhanced their operational approach and we have also in recent days and I mentioned it briefly in the remarks there and I mean we've engaged very heavily with the banks about the implementation of payment breaks in general but in recent days we have also set out in a dear CEO letter a lot more detail on our expectations about how they will kind of implement these the need to treat their customers fairly to engage with them effectively and I think one of the things that's on our mind is to avoid also something happened the last time which you know we used to refer to as extent of pretend where people entered into repeated short-term arrangements so I think if customers are going to have a longer term issue and the longer term inability to pay because of their employment situation or whatever it's incumbent on the banks to make sure that engagement happens with them early and they forget the correct kind of sustainable restructuring as quickly as possible but I give you a question from Peter McCoon who's an IEA board member and the question is as follows to what extent does the prospect the second wave of the pandemic affect economic forecasts and prospects next year and beyond that and is there a limit to our borrowing capacity that might come into play at that time yeah so it's it's very difficult to answer and I've found the last few days as we've published the financial stability report and some of our analysis is a big challenge on this point about uncertainty I mean I think it's just I think the IMF said this morning Gita opened up a profound level of uncertainty all of these things about the risk of a second wave and if there were a second wave would the response to containment measures for example be the same or would they be done in a different way many countries are talking about for example much more localized containment measures so in this environment it's very very difficult to forecast what might happen in fact for us at the central bank you know we're really looking I think more at scenario type analysis like many other central banks around the world so kind of what if it went this way and what if it went that way and a critical factor I think is the sectoral differences so I think it's clear already that there are very different sectoral effects and you can see in some of the data that's coming out from the bank from CSO we published some analysis yesterday on sectors that are very directly affected sectors that are very indirectly affected and some other sectors maybe that are less affected at all so I think thinking about the economy and the effects of the virus in a sectoral way is quite important I mean on debt sustainability as I said in my remarks I mean in general the economy is going into this in a better place than it would have been a number of years ago we do obviously though have a high debt level and I think as I said over the medium term we have to really think about debt sustainability but I think for now in the context of the kind of low interest rate environment and also the fact that the fiscal response is clearly very necessary to support the economy we have to kind of proceed on that basis In your paper you make a reference to the incomplete financial architecture in European context do you think that this pandemic is going to actually increase the speed at which some of those projects that you like are there and are sort of ongoing will actually move accelerated or will distract attention from that because people are dealing with the current crisis as opposed to the institutional structures that are being done So I think what happened the last time certainly was there was a recognition of these incompleteness issues and in fact even though there was a lot going on in many cases there was a very swift response so the move for example to banking union and single banking supervision which you know had been moved from time to time but never really gained any momentum at all on which there would have been I suppose quite a number of concerns and objections to and some countries proceeded both quickly and I think given the scale of the operation that was needed to do that quite effectively so I do think while as you say there is an awful lot going on at the moment and you know the EU for example has many issues to deal with including the recovery fund and thinking about climate change and so on I do think crises like this do provide the opportunity to kind of prompt thinking about what else needs to be done and what needs to kind of be addressed I only touched on it briefly in my remarks there but I think one thing we would feel quite strongly about here is the kind of global non-bank sector so Ireland as people on the call know has a big international financial centre part of that is a big funds industry we have seen stresses and strains in the fund industry over recent weeks and months we have said previously at the bank that you know the fund sector has been untested in times of stress and while there are certain supervisory tools when we look at funds on an individual basis the way we have the kind of macro framework for banks like the macro-predential tools we don't have those type of tools for funds so I think there are issues like that that maybe would need to be addressed that hopefully there would be an opportunity presented by this banking union also there has been significant progress but it remains in completion in terms of the deposit guarantee scheme for example at European level and again we have advocated for that so I suppose I would hope that there will be opportunities to use this crisis to prompt some further progress in the same way that the global financial crisis I think prompted some fairly significant global reforms but particularly at European level as well actually Peter McGregan by VPFI his question is very much in the same space but he takes a slightly different place if the pandemic lasts and we see rising non-performing loans do you think that the regulatory framework will need immediate tweaks and specifically around the treatment of non-performing loans from regulatory capital perspective so in other words I suppose there's the architecture direction but then there's the changes but then it's how your operation rises in the meantime yeah so I think we spent a lot of time after you know once the global financial crisis had emerged thinking about the regulatory architecture and thinking about how for example issues about timely recognition of non-performing loans should happen and there were certainly issues and concerns about that in the previous crisis I think regulators central banks we should always be open to thinking about whether the frameworks need reform and so on but I think you can't necessarily just look at what's going on at the moment so this crisis presents you know very specific aspects and so on and we I don't think it's a good idea for policy making to just be responding to every single crisis or issue that emerges we have to have a kind of coherent policy framework we're clear about what we're thinking we're clear about our objectives so I think if there are you know amendments needed and I mean there is work being done I think in the European Parliament looking at the capital requirements director for example that that will happen but of course the framework itself needs a kind of certain coherence and it needs to be resilient to different circumstances on different things that can emerge and this is a particular type of crisis we've seen other types of crisis in the past we may see other types of stresses and strain in the future and you know regulatory frameworks policy toolkits and so on have to be I think resilient to those different aspects they can't just be tweaked for the individual circumstances that might arise okay and I'm waiting for more questions to come in but I want more to keep us keep going back to one of the things you touched on which I guess was Brexit as one of the issues that's still out there and I'm just wondering whether or not you think that that in every case the COVID factors and the Brexit factors will kind of reinforce each other we noted the fact that there's quite a lot of sectoral differences in relation to the COVID and I guess they're also unrelated to Brexit there were different sexual ones from the analysis if any has been done and the bank has anything emerged in terms of the extent to which they reinforce each other or they're they're affecting different sectors it's a more widespread rather than a reinforced effect yes so we are looking at this also in the context of our quarterly bulletin which we'll publish in a couple of weeks I mean obviously the scale the size the scope of the pandemic and how it's affecting not only our economy but globally is on a scale far more significant than the effects of Brexit and also leads to this kind of profound level of uncertainty that we've been discussing when we looked at Brexit in terms of sectoral effects I mean obvious to people I think some of the sectors around food for example food exports to the UK the links between Ireland and the UK around tourism for example and the common travel area so maybe tourism and hospitality would be one area where there are some overlaps but obviously the hospitality sector think has very serious challenges at the moment in any event from the pandemic so we are looking at that I think some overlaps but also some differences I think for us the uncertainty at the moment because of the Brexit talks is obviously a key factor and then the vulnerability I suppose of the Irish economy because of our close links with the UK in particular will be things that we're looking at in the context of the bulletin and do you have any sense in which you know you get we get to sort of reading various papers a sense that there's a lot of harmony but in terms of the actions that institutions and countries are taking in relation to this crisis because as you said it's a truly global crisis whereas the financial crisis called the global financial crisis wasn't quite as global as this has turned out to be we think that will last I think we're at the honeymoon stage of those interactions where we're in sense also the same side and how are you any sense of how that might play out or have you had any work done that might show I feel like where countries different interests might bring them to different directions in relation to their responses about the extent to which this stimulus is stimulus of different kinds is there has certainly been some commonalities I think and I mean at the central bank I think we are involved in kind of stop taking exercises around Europe and around the globe about what different policymakers have done whether that's fiscal or central banks or as I said micro or micro prudential policy and there has been I think using some of the the global fora like the financial stability board for example there have been some discussions about you know coordination and and as I said trying to have mutually reinforcing policies but there have also been important differences like I think even at European level we see for example that some of the lending supports have been more in the forms of guarantees and moratoria for example maybe have been introduced on a statutory or legislative basis in some countries and not in others including Ireland for example and so there have been I think also some important differences part of those things are probably you know legacies from the previous crisis in terms of how the previous crisis is informed the thinking about what some central banks or some fiscal authorities want to do but I think given that also some of the effects around the globe are likely to be quite different depending on the structure of your economy depending on some of these such sectoral effects depending for example on the success of individual countries and dealing with the pandemic in their own local countries you are likely to see I think ultimately some quite different potentially quite different responses. The question from Kilian Rossi in the IIEA and it's concerning purchases under the ECB's pandemic emergency purchase program between the two will be extended until the end of 2020 until such time as the ECB judges the pandemic crisis to be over and I guess is a question of how is going to decide that at that point and do you envisage an extension of it or is it largely a health question or a banking question? Well I mean I think that health response is going to be critical to deciding when is the crisis over so you know can we contain the virus and the containment measures for example this debate about whether and you know containment measures can operate in a more subtle way where they're localised or regional or particular sectors and so on these are obviously all very very critical aspects and I think though on policy and the ECB many governors members of the executive board and so on have been absolutely clear that the ECB stands ready to take the necessary policy action to provide the support that's needed at the moment and we've obviously introduced the pandemic program and extended it it's been a critical I think policy tool over the last number of weeks and months because it's allowed a very kind of rapid and very clear and sizable response and so I think that's been very important as I mentioned we do have the lending operations as well to support liquidity and I think I even mentioned in my speech was another of my former bosses Philip Lane said last week about trying to avoid a credit crunch and I think the ECB very much stands ready to make sure along with us in the very zero system central banks that for example that doesn't happen and that the economy gets the support that's needed I think the reason why that's so important is of course you know as a central bank we expect the banks to lend prudently and we expect a proper risk management approach but the concern is that if there's a credit crunch now and banks kind of retrench and stop offering that kind of support that SNEs need and so on then these liquidity problems ultimately become solvency problems for those firms those firms go out of business and ultimately the effect on the economy would be much worse than if the support was provided now so I think that is why this kind of credit support at the moment and it's so important I think that's very striking in your presentation just how a little credit availability that SNEs have in the nature that they've been doing and mainly because for an expansion mode before this crisis came so there were probably plenty quite drawn down it's a question from Michael Tutti the former assistant secretary of the Department of Finance are you any concern about the future room for action from the ECB in the light of the German constitution? Well I think Vice President Degendals was here at the IIEA last week and I think also I mean individual central banks in the Euro system and the ECB have been very clear with all due respect to the court you know the ECB is a European institution accountable to the parliament and kind of overseeing in a legal jurisdiction way by the European Court of Justice as I've just said we have been clear I think not just in recent weeks in terms of the crisis but also over a longer period than that you know that we stand ready to do whatever is required to meet our price stability objective you know there's a lot of debate I think in recent years about whether central banks had reached the end of their toolkit and so on and we've seen significant developments in terms of unconventional monetary policy and how that's evolved and I think there's an absolutely clear commitment to take the policy action that's needed so that ultimately we meet our price stability objective at the medium term but of course the focus of that at the moment is I suppose meeting that objective through providing the support to the economy that's needed right now. I mean does strike me that that recovery out of this crisis like the last time but perhaps more so is going to be very confidence is going to be absolutely crucial and statements like you know doing whatever it takes really helps in relation to that if you think there is there's going to be need for action to if you like promote that confidence are other economic instruments that you consider to help promote that confidence for the people and you know have the resources will actually go back into the market whether they're households or businesses or whatever we take we take risks. Is there a rule for policy in that space? So I do think there is I mean I think even in thinking about the economy ourselves at the moment and I've seen this other commentators including internationally you know a concern about whether and what's happening at the moment ultimately changes kind of behavior sentiment big increases in precautionary savings for example maybe changes the way that people consume. Will it have effects on kind of globalization and global value chains and you know how countries import and export and so on. So I think there's certainly potential for kind of long-term effects but in an environment where there is so much uncertainty then I think policymakers can to some extent anyway bring some certainty and as I said in my remarks you know there's been policy across fiscal monetary macro-prudential and micro-prudential so I think you know people can take confidence that action is being taken to support the economy through this so that we have you know the best chance of ultimately emerging from this and being on a kind of path to as quickly recovery as is possible. So I do think there is an important role for policymakers in that in giving people confidence and I think some of the things that we've done you know ourselves in terms of releasing the capital buffers for example so that banks can absorb those losses the work we're doing on payment breaks and other central banks around the world as well who are you know taking similar steps are important in giving people confidence but you know we can see this through and emerge the other side. And from a European perspective do you think those you know you've mentioned you talked earlier on about the complementary relationship between what's happening on fiscal and monetary policy here you think within it with any European context you think there's a harmony between the post-economic and what the Commission is looking for and what the various different European institutions are I mean is it more joined up than it was the last time around and is it I mean are there any signs in your view for where that could fracture? So I think earlier on in the pandemic as you know everybody was trying to get to grips with what was going on and it was more challenging than it is now and I think at the beginning when the ECB first introduced the pandemic program you know there were strong calls for a strong fiscal response there's obviously a big debate about you know how that was going to happen and what the terms and conditions were going to be various policy instruments were being looked at and there was I suppose a period of uncertainty while all of that was going on I think there's a lot more coherence now on what's being discussed in terms of kind of recovery funds and how that's going to be taken forward I appreciate obviously but still work to be done kind of agreeing all of that and exactly how it's going to be executed but I think you can see that kind of coherence or coming together in terms of how things might proceed of course that has to be followed through and then I think you get to this kind of ideal of fiscal policy and monetary policy really kind of mutually reinforcing and complementing each other. Final question from me and I'm sure anybody else wants to come in because we're running up to the club and I suppose it's again thinking back to the last crisis we have a very strong view that the extent of which was data available and research being done now is at a very different speed and pace I mean do you feel there's a sense in which as you go month to month I know the bank itself has got its own indicators collected do you think that you know from the last crisis we have the benefit of having structures which give us more immediate information on the economy so we're not waiting for the full CSO data before we can actually take action. So I definitely think there have been some improvements and in the bank ourselves you know we've done a lot over the last number of years to enhance the data that we collect we have for example now the central credit register in terms of what's going on the credit market which we didn't have going into the previous crisis and proved to be I think a really significant challenge because we didn't have that kind of knowledge and analysis. Having said that I would say you know we have done some work on real-time economic indicators over the last few weeks and it was challenging you know there were things that we didn't necessarily collect prior to this I suppose because what has happened is so unusual and so different to anything that we we would have expected so you know we're collecting data at the moment on kind of flights on traffic like many others we're looking at kind of you know data being produced by google and the like on people's movements and so on and so we are I suppose looking at quite different indicators to try and give us that sense. We have though I think made progress on things like using payments debit card payments use of cash business cycle indicators that I talked about in my remarks so I think in general we are definitely in a better place on kind of data and our ability to do quick analysis but of course that always depends on the circumstances so you know we didn't have everything at our fingertips that we would have liked in the context of what's just happened and I'm sure in the future other things will happen as well that turn out to be unexpected and we don't have exactly the data that we would like but for me data is central to proper policymaking it's a really important part of what we do at the bank it's a really important part I think also what we produce publicly so not just for us but for commentators people who are on the call economists academics and so on to also look at that data to be able to do their analysis as well and which we obviously also look at in terms of thinking and forming our own policy thinking as well there's a question in Dara Moriarty in the IIEA and that's about your financial stability report which was published yesterday it notes the influx of overseas money into the commercial property market in Ireland in recent years and the high level levels of debt against these assets so the question is do you have a view on the possible impact of increased remote working arrangements on commercial real estate values in other words is this you know changed the new normal is it going to actually have an impact back into the demand for the scale of the requirement of commercial real estate this is the first thing I've just done that point that's in the financial stability report I mean the commercial real estate market in Ireland has changed quite significantly from the last crisis so while the domestic Irish banks do have some exposure to commercial real estate it's nothing like the scale they would have had going into the financial crisis and there are significant more international investors invested in Irish commercial real estate of course that makes us vulnerable to kind of you know international issues then in terms of flight of investors who want to go and invest elsewhere so I suppose it poses a slightly different type of risk I mean on commercial real estate in general again subject to significant uncertainty it is an area that we're looking at personally you know I hear very mixed messages about that of course maybe people prefer working from home some of the time but also the huge benefits of people actually being able to socially interact to being able to meet together you know the difference between being in the IIEA or being on this call and so anything I've seen is about kind of the prospect for quite mixed and effects in terms of offices and so on I mean our own experience at the bank also is in terms of social distancing and so on to have people back at the office for the people we will have back at the office we actually need more space not less so it's like having these kind of competing forces and against each other so I do think there will be a kind of long-term societal change and we've learned that we can do something maybe on a size and scale that we didn't expect we could I think it will change about how people think about working from home and maybe also how people think about where they want to live and commute and so on and but whether actually the fundamentals of needing to get together and having interaction in some home base like an office I think that ultimately will be required as well but those kind of competing effects and how they ultimately turn out and respect to the Cree market overall I think remains quite uncertain So we're coming up to the wire is there anything that you would like to make back with concluding remarks in terms of things? No I think I've covered a lot there in my remarks maybe just to remind people if they are interested they're obviously available on the website along with the charts and a whole range of other material that we've been producing over the last couple weeks including as we've just been discussing some real-time economic indicators and so on I think for us and we've done a lot of work over the last number of years to try and build the financial resilience of the system and I think it has proved its value over recent weeks the fact that we've had capital buffers the fact that the mortgage rules were in place and so on you know have really assisted how the economy is going to be able to bear this shock and unfortunately there is profound uncertainty I'd like to be able to you know answer I suppose more clearly on some of the questions that we are faced with this very uncertain environment but certainly at the bank we're very focused on making sure that our policy actions are effective and that we also try to help people understand I suppose what's going on but they can also assess what's going on in the economy and contribute to the debate at events like this and at the IIEA and also more widely so just to thank the IIEA again and yourself Francis it's lovely to have an opportunity to talk to people if in a different way