Feb 2, 2023
Ireland’s Makhlouf Warns of Brexit, Fintech Growth Challenges
(Bloomberg) -- Ireland’s central bank governor Gabriel Makhlouf warned Finance Minister Michael McGrath that the growth of financial technology, Irish government policy and Brexit have created “challenges” for its job as a regulator.
Makhlouf said the Central Bank’s mandate covers many sectors that served Irish, European and global consumers and markets.
“The growth of these sectors — not least as a result of the Ireland for Finance Strategy, the UK’s withdrawal from the EU and the focus of technology firms on financial services — poses challenges to our mandate,” he wrote in Jan. 17 correspondence sent to McGrath.
The aim of the central bank is to “continue to deliver its mission through a period of significant change,” he added in the letter setting out the regulator’s 2023 priorities.
The bank declined to comment on the challenges it was facing, beyond the comments contained in Makhlouf’s letter.
The Central Bank’s role in regulating financial technology has been in the spotlight over recent years. Payments company Stripe recently recommended that Ireland should benchmark its regulatory approach against “major peers in the EU.”
Stripe Warns Uneven EU Regulation Disadvantages Irish Firms
The regulator has established an innovation hub to allow fintech firms to engage with it outside of existing formal processes and plans to consult the industry on proposed enhancements in 2023.
Meanwhile, Ireland aims add 5,000 net new jobs in the international financial services sector in the four years through 2026, building on the estimated 52,000 workers currently employed in the sector.
Brexit has foisted an additional workload on the central bank as some financial services firms have moved operations from Britain into EU member states such as Ireland. European authorities want local regulators to keep a closer eye on whether these offices are properly staffed.
Makhlouf also singled out the funds sector and said introducing “measures to mitigate green-washing risks” were among the central bank’s priorities. It would also focus on enhancing “governance, oversight and investor outcomes” within the industry, he added.
Michael D’Arcy, CEO of the Irish Association of Investment Managers, said green-washing was not taking place in the industry and that the EU’s Sustainable Finance Disclosure Regulation was “vague.”
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