Irish funds sector: Resilience, innovation, regulation
Deputy Governor Mary-Elizabeth McMunn of the Central Bank of Ireland outlined key priorities for the Irish funds sector. She emphasized the need for resilience, innovation, and adaptive regulation amidst rapid structural change.
A global success story under pressure
Ireland's funds sector has grown significantly, becoming the third largest funds domicile globally.
Assets under management expanded from approximately €1.6 trillion across 6,000 funds a decade ago to €5.6 trillion in over 9,000 funds today.
This success, built on legal and regulatory infrastructure and human capital, now faces profound geopolitical shifts.
Trade relationships are being reconfigured, supply chains re-routed, and sanctions regimes expanded, making capital flows increasingly subject to political considerations.
This changing global risk environment demands adaptability and resilience in portfolio construction, counterparty relationships, and operational arrangements for the internationally oriented Irish funds sector.
Harnessing AI and tokenisation safely
Technological transformation, particularly artificial intelligence (AI) and tokenisation, offers significant opportunities for the funds sector in areas like portfolio management, risk detection, and compliance.
However, firms must ensure explainability, accountability, and human oversight in AI deployment.
Tokenisation promises greater efficiency in settlement and enhanced transparency.
The Central Bank of Ireland actively engages with these innovations, ensuring fundamental regulatory protections are maintained regardless of the technology used.
Beyond managing liquidity and leverage, resilience also encompasses governance quality, rigorous stress testing, and robust operational arrangements.
To further strengthen resilience, a consultation on Money Market Fund Weekly Liquid Asset Levels has been published, setting expectations for liquidity levels in line with market resilience.