Ireland’s financial services sector is in turmoil, with investors fearful that it will be harder for them to access their money when the next crisis hits.
The banking sector is among the most heavily regulated in the world, with banks required to comply with stringent security standards and maintain a certain level of liquidity in order to be able to lend to consumers.
There is a belief that this will be an even bigger obstacle for the Irish financial services industry when a financial crisis strikes.
Financial services are seen as the safest way to finance the economy, especially for consumers who may not be able afford to spend more.
But a report from the Bank of Ireland (BoI) says that the financial sector is under more pressure than ever.
The BoI report warned that Ireland’s economic downturn and its continuing slump in the value of the pound is “a significant risk to financial stability”.
The BoE said the risk posed by a banking sector under more stringent security requirements, coupled with a continued fall in the Irish pound, has contributed to a risk of a “significant financial downturn”.
The report also warned that there is a risk that the Irish economy will not recover from a financial shock if financial services are not restructured.
“This has serious implications for Ireland’s economy, as financial services provide the bulk of employment and growth,” the BoI said.
“In particular, it is important to address this risk through a comprehensive restructuring of the banking sector and the banking system as a whole.”
According to the report, the Irish banking sector has faced increasing volatility since the end of 2016.
The BoI believes that there are two reasons for the volatility.
One is a continuing fall in sterling.
The report also said that “in the absence of further monetary easing from the ECB and/or from the UK and Ireland’s major financial institutions, there is an increased likelihood that financial markets will move towards a rate of higher interest rates” in the coming months.
The other risk is a possible Brexit fallout.
This could result in a reduction in the number of Irish citizens living in the UK.
However, there are also other factors at play, the BoLI said: “The uncertainty of the outlook for Irish banks has affected the banking industry in a way that has impacted the viability of the Irish commercial banking sector.”
It said that the banking environment in the United Kingdom has also been affected by the UK’s economic and financial crises, with the BoJ warning that the current economic situation is “particularly detrimental to the future prospects for the financial services sectors of Ireland and the United States”.
“The continued deterioration of the UK economy and the uncertainty over its future as well as the prospect of the United kingdom exiting the European Union are significant concerns for the future financial services of Ireland,” the report added.
According to data from the Irish Central Bank (ICBC), the Irish government has received £17.3bn in loans in the first nine months of the year, compared to £14.6bn in the same period last year.
The bank also expects this to rise to £22.3 billion by the end in 2020.
The Irish government is seeking to provide financial stability to Irish banks in the event of a financial disaster.
The ICBC said that it would continue to lend money to Irish and international banks.