Regulation

Background and Reform As originally constituted in 1942, the Central Bank’s function was to maintain the integrity of the currency and issue legal tender.  In 1971, the licensing of banks was provided for.  It was provided that a bank shall not in or outside the State carry on banking business or hold itself out or represent itself as a banker or as carrying out on […]

Special Management Order Courts may make a special management order appointing a special manager to a credit institution meeting certain criteria.  The intervention conditions must be fulfilled, and a special management order must be necessary in the circumstances. Before making a special management order proposal, the Central Bank has to give written notice to the institution, subsidiary or holding company concerned describing the terms of […]

The Bank Guarantee The financial crisis prompted a number of emergency pieces of legislation designed to prevent the collapse of financial institutions.  The state’s guarantee of the liabilities of the Irish banks (later extended) was reflected in the Credit Institutions Financial Support Act 2008. This became law on the 2nd of October 2008, 48 hours after the announcement of the guarantee.  It contemplated that financial […]

Background The worldwide financial crisis which commenced in 2007 worldwide followed a period of over 10 years of relatively low inflation and interest rates.  In the United States, interest rates were maintained at a low rate, following the bursting of the so-called “dot.com” bubble. In Europe interest rates were maintained low, while Germany emerged from a period of recession and d slow growth caused by […]

Joining the Euro Ireland joined the Euro system in 1999 and immediately benefited from a significant fall in interest rates.  For the previous 20 years of the Punt’s existence, interest rates had remained high, due to a range of factors, not least the recurrent devaluations of the Irish punt, which led to  a risk premium relative to major currencies. In the early years of the […]

Background Ireland ratified the Bretton Woods Agreement at the end of the Second World War establishing the International Monetary Fund and the World Bank.  In its early years, the system pegged the exchange rate of currencies to the dollar.  The dollar was itself was itself  pegged to gold. In 1971 the United States decoupled the dollar from gold and they revalued it following severe pressure […]

Financial Crisi Reform In the wake of the financial crisis, the Central Bank Reform Act 2010 established the Central Bank of Ireland as a single regulator.  It is led by the Governor of the Central Bank.  The Irish Financial Services Regulatory Authority was dissolved and its functions were brought back under the umbrella of the Central Bank of Ireland. Certain of its consumer functions were […]

Regulatory Powers The Central Bank has broad regulatory powers over financial service providers, encompassing risk management, internal procedures, accounting, auditing, client provision of services, information disclosure, customer dealings, loan information, protection of money, insolvency events, and effective complaint mechanisms. Before making rules, the bank must consult with the Department of Finance. Using this power, the bank formalised former codes and made regulations on matters previously […]

Requiring Information and Review The Central Bank Supervision and Enforcement Act 2013 sought to significantly improve and enhance the Central Bank’s powers of supervision over credit institution and financial service providers generally. The Central Bank may require a regulated financial services provider or any related undertaking to it  by notice, a report on any specified matter in relation to which it has the power to […]

EU Directive A 1994 EU directive provides for deposit protection.  The rules have been modified and updated in the light of the financial crisis in 2008. There are harmonised deposit guarantee requirements.  Each state must ensure one or more deposit guarantee schemes is introduced.  States may exempt institutions belonging to a scheme which ensures the continued operation of its credit institution member. Completed authorities must […]

Firms Covered A home reversion firm is a business providing and entering home reversion agreements.  A home reversion agreement is a transfer by the owner of a home to a reversion entity for a discounted income with the owner retaining a right to live in the property until specified events are from death or cessation of ability to live in the property. A retail credit […]

Licensing Banks and other credit institutions are licensed and authorised by the Central Bank, formerly the Financial Regulator.  A banking business is defined principally, as the taking and receiving monies on deposit.  Retail credit firms are regulated in a similar fashion, by the Central Bank.  Certain other financial services providers, including, in particular, building societies are subject to a similar regulatory regime. EU legislation allows […]