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MNI POLICY: BoI's Sibley: Hard Brexit Damaging But Manageable

By Luke Heighton
     FRANKFURT (MNI) - Cliff-edge financial stability risks arising from Brexit
are manageable, a senior Central Bank of Ireland official said Thursday, with
legislation being drafted to protect consumers of insurance products in the
event of a No Deal scenario.
     But a hard Brexit will be "bumpy for the economy", would undoubtedly be
damaging for Ireland, and will disrupt the financial system. Deputy Governor
(Prudential Regulation) Ed Sibley said, even though the Irish banking system "is
resilient enough to withstand these bumps."
     Here are the key points from Friday's speech in Dublin:
     --"Brexit has short-term and long-term implications for the structure of
the Irish economy. Any form of Brexit will be damaging for Ireland, with a hard
Brexit especially so," Sibley said. "For the wider economy, the effects will be
uneven, with indigenous sectors (such as agriculture), which are likely to be
larger employers in rural areas, facing heightened risks of disruption to
exports and supply chains."
     --The prospect of Brexit has led to a flurry of new authorisations and
expansions of existing financial operations, 'Sibley said. "From large
investment banks through to small payment servicing firms, well over 100 firms
have applied for new authorizations or for permission to expand their
businesses" since 2016.
     --Ireland retains "significant vulnerabilities" - most notably public and
private debt levels - which left it "more exposed [...] to material external
risks, including those arising from Brexit and other geopolitical risks, and the
wider international trade environment." The Central Bank "can do little to
mitigate these global risks." However, "it is clear that Ireland has emerged
from a period of focus on crisis management and entered one of crisis
prevention."
     --Sibley said he expected regulated firms "to be looking forward, to be
anticipating future significant risks and opportunities to ensure that they
remain resilient over the long term. This is not sufficiently evident. To take
one example, climate change needs to move higher up the agenda of the Irish
financial services system."
--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com
--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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