Funds industry "too large to ignore"

In order to protect financial stability, the governor of Ireland's central bank has advocated for tougher regulation of the country's €5.6 trillion funds sector.

The governor of the Central Bank of Ireland (CBI), Gabriel Makhlouf, stated that the non-bank sector – which includes investment funds, money market funds, and special purpose organisations – need additional regulation and that global cooperation is "urgently" required.

In Dublin, at the CBI's first financial system conference, the governor outlined proposals to limit leverage for property funds tied to the domestic economy.

"The lessons learned from the global financial crisis, the covid-induced market shock of March 2020, and the United Kingdom's recent LDI issue are evident. The market is too large to be neglected "Governor remarked.

"We cannot address the larger issue on our own. Urgent global and European coordination is required here, I believe ".

The funds industry in Ireland is the third largest in the world. Between 2016 and 2021, the number of entities registered in Ireland increased by 66% to over 10,000, while assets under administration increased by 86% to €5.6 trillion. "The risks to financial stability are obvious, as are the risks to investors, consumers, and society as a whole," warned Makhlouf.

Underscoring the bank's dedication to preserving investors' interests through expedited operations, he urged stakeholders to be adaptable, forward-thinking, and interconnected in their approach to sustaining a stable financial system.

By fLEXI tEAM