A new discussion paper published yesterday aims to advance ongoing international and European discussions on how a macroprudential perspective in the regulation of the funds sector could be achieved. It outlines key considerations for developing and operationalising such a framework.

The size of the funds sector globally has grown significantly in recent years. It is playing an increasingly important role in the global financial system and real economy, and is also becoming a more important source of finance in Ireland.

A macroprudential framework for the funds sector would take a system-wide perspective and aim to ensure that this growing segment of the financial sector is more resilient to stresses and less likely to amplify adverse shocks. In turn, this would better equip the sector to serve as a resilient form of financing, supporting broader economic activity.

The Central Bank is seeking feedback from stakeholders on a number of issues raised in the discussion paper to inform further analysis and policy work in this area via an online survey which will run until 15 November 2023.

Vasileios Madouros, deputy governor for monetary and financial stability, said: “As the financial system evolves, it is important that the regulatory framework also adapts.

“Developing and operationalising a macroprudential framework for the funds sector has been a priority for the Central Bank in recent years. This discussion paper intends to facilitate discussion and progress in this area internationally.

“The Central Bank is actively working with colleagues and institutions globally in this area and our aim is that the discussion paper will generate debate and focus attention on how a macroprudential perspective in the regulation of the funds sector could be achieved.

“We look forward to engaging with stakeholders on their views and encourage them to submit feedback to inform our work.”

The Central Bank will consider the feedback received from the survey and will publish a feedback statement next year.