Ireland: Financial Sector Assessment Program-Technical Note on Financial Interconnectedness of the Market-Based Finance Sector
IMF Staff Country Reports, July 27, 2022
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Bibliographic details
- Published: July 27, 2022
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400216411.002
Overview
- Publication date: July 27, 2022
- Purpose: Investigates the interconnectedness between the market-based finance (MBF) sector in Ireland and the rest of the financial system to assess potential financial stability risks.
- Context: Builds on the 2016 Financial Sector Assessment Program; assesses progress and remaining gaps.
Key findings
- Ireland has made good progress in implementing the recommendations from the 2016 Financial Sector Assessment Program.
- Important data gaps remain to be closed, particularly concerning the other financial institutions (OFI) residual.
- Many linkages between the domestic economy and the MBF sector have been analyzed, but challenging data gaps and opaque linkages relating to the OFI residual persist.
- The Central Bank of Ireland’s fund stress-testing model remains under development.
- Gaps exist in granular data collection and analysis of:
- the interconnectedness of the OFI residual, and
- the composition of the significant activity of the remaining OFI residual.
- Overall assessment: Notwithstanding progress, further work is needed to fully elucidate linkages between parts of the MBF sector and (a) the rest of the financial system and (b) the domestic economy, to explore further areas of potential systemic risk.
Data, models, and analytical gaps
- Central Bank of Ireland fund stress-testing model: under development.
- Granular data collection: gaps remain for detailed analysis of OFI residual activities and interconnectedness.
- Opaque linkages: require ongoing cooperation at domestic and international levels to be explored and clarified.
Policy implications and recommended actions (implied by analysis)
- Continue closing important data gaps on the OFI residual through enhanced domestic and international cooperation.
- Advance development and refinement of the Central Bank of Ireland’s fund stress-testing model.
- Strengthen granular data collection and targeted analysis of OFI residual composition and interconnections with the MBF sector, the rest of the financial system, and the domestic economy to identify potential systemic risks.
Content in this bundle
- 1irlea2022007