The Central Bank of Ireland has published a speech by Deputy Governor Mary-Elizabeth McMunn setting out the Bank’s position on capital, competition and regulatory complexity. In the remarks, she argued that calls to lower bank capital requirements or to give the Central Bank a mandate to promote sector competitiveness would move beyond simplification into deregulation, and said any changes to the European Union prudential framework should preserve current resilience. She also said the Bank’s latest analysis points to a more diverse and competitive Irish lending market than is suggested by focusing only on domestic retail banks, while simplification should streamline rules and processes without weakening safeguards. On capital, McMunn said euro area bank credit growth is about 3% and Irish credit growth is above 6%, while Irish banks hold more than 600 basis points of capital above regulatory requirements compared with nearly 500 basis points across the European Union, and return on equity is above 10% in both Ireland and the European Union. She said this does not support the case that capital is constraining lending, profitability or competitiveness, noting also that European Union implementation of Basel III reduced capital requirements for some banks, including a 6% reduction for Irish banks. On competition, she said new Central Credit Register research shows that including foreign banks, non-bank lenders and credit unions cuts measured concentration in new business lending by more than half and in consumer credit by almost 80%, with around one third of Irish firms and 40% of SMEs borrowing from multiple lender types. On complexity, she highlighted operational and cyber resilience as a priority and said firms should continuously assess ICT risk, update controls for emerging threats including frontier artificial intelligence, and maintain tested response and recovery capabilities in line with the Digital Operational Resilience Act.
Central Bank of Ireland 2026-05-07
Central Bank of Ireland deputy governor rejects calls to lower bank capital and add a competitiveness mandate
The Central Bank of Ireland published a speech by Deputy Governor Mary-Elizabeth McMunn stating that lowering bank capital requirements or adding a competitiveness mandate would amount to deregulation and risk undermining resilience. She argued that data on credit growth, capital buffers and returns on equity do not support claims that capital is constraining lending or competitiveness, and that broader measures of the Irish lending market show greater competition than suggested by a focus on domestic retail banks. She also stressed that simplification should not weaken safeguards and highlighted the need for firms to strengthen operational and cyber resilience, including ICT risk management and response capabilities under the Digital Operational Resilience Act.