At an event in Trinity College Dublin this week Deputy Governor, Prudential Regulation, Ed Sibley spoke about the financial system a decade on from the start of the financial crisis.
 
While acknowledging that these reforms have increased the resilience of the system, he detailed some of the persistent legacy issues that the Central Bank sees in the financial system, including the findings of its recent work on culture and behaviour. He said that these factors continue to present risks to the system and hamper the rebuilding of public trust. 
 
On the legacies of the crisis, he highlighted the remaining high level of non-performing loans and capability issues in critical areas, including in IT risk management. Sibley said resolution plans are not yet fully implementable, meaning that there is further work to be done to remove implicit taxpayer support for the larger banks. He said banks also have work to do to improve their cultures and the levels of diversity at senior levels.
 
Speaking on Wednesday, Mr Sibley said, "Even as the sun is shining today, there are clouds on the horizon. One can hope that future storms are not as severe as the last one, but storms there undoubtedly will be. Building resilience now, for individuals, governments and banks will serve us well for future downturns, whatever the cause may be.  It will also help with the pressing need to restore trust in the system, a foundation of which is that financial institutions are trustworthy."
 
He added, "My hope is that in 10 years’ time, we will still remember the banking crisis and the lessons from it. But that between now and then we will have navigated the many challenges ahead and more successfully weathered the inevitable shocks that will occur, than we did 10 years ago. This will require continued diligence, building resilience, a willingness to listen to different voices and challenge the assumptions we are relying on – it is inevitable that not all of them will hold."

Source: www.businessworld.ie