McMunn details purpose-driven financial regulation and supervision
Mary-Elizabeth McMunn, Deputy Governor of the Central Bank of Ireland, outlined the institution's approach to outcomes-focused regulation and supervision. Speaking in Dublin, she emphasized its role in ensuring the financial system serves consumers and the wider economy.
Five pillars for the year ahead
The Central Bank of Ireland has detailed five overarching priorities for its regulatory and supervisory work in the coming year, as outlined in its annual Regulatory and Supervisory Outlook.
These include maintaining and building resilience to geopolitical risks and macro-financial uncertainties, with a focus on operational and financial stability.
A second priority is securing consumer and investor interests, addressing firm operations, digitalisation risks, and financial crime.
Third, the institution is responding to technology-driven transformations, specifically the expanding use of AI, digital money, and tokenisation, including their regulatory oversight.
Fourth, the Central Bank is helping to address environmental and societal transitions, encompassing work on protection gaps, retail investment, and sustainable finance.
The fifth priority involves enhancing the regulatory and supervisory approach itself, including simplification efforts.
These priorities are underpinned by a continuous focus on firms' governance, risk management, and culture.
Evolution of purpose-driven oversight
Outcomes-focused regulation and supervision, while not new, is continuously evolving at the Central Bank of Ireland.
It means designing and executing the rule book and supervisory work towards a clear purpose and desired outcomes.
Lessons from past crises underscore that rules must be clear and enforceable, and crucially, complemented by robust, risk-based supervision.
The Central Bank's work is guided by four Safeguarding Outcomes: protecting consumer and investor interests, ensuring financial system integrity, promoting firm safety and soundness, and maintaining financial stability.
Success in this approach hinges on clarity regarding regulatory expectations, firms internalizing their responsibilities for delivery, and supervisors exercising sound judgment with timely, proactive interventions.
Beyond the rulebook
This speech provides a valuable insight into the Central Bank of Ireland's strategic shift towards a more proactive and integrated supervisory model.
By explicitly linking regulation to tangible outcomes, it aims to enhance effectiveness and accountability in a complex financial landscape.
However, the true test will lie in the practical implementation and measurable impact on consumer protection and financial stability.