Insights Blog

Sustainability, digital finance and diversity were key themes at yesterday’s European Financial Forum, at which the Government launched its Ireland for Finance Action Plan 2021.

The speeches delivered at the Forum were positive, forward-looking and focused on resilience and recovery. Key takeaways included:

Digital finance: the development of digital finance strategies is key, and the COVID-19 pandemic has shown how legislation and regulation need to be fit for digital finance. ESMA Chair Steven Maijoor noted that working from home has generally been successful across the industry, but that cyber-risk, cyber-security and outsourcing have assumed even greater importance as a result. Work on a possible digital euro is continuing (for more information, see: ECB digital euro consultation ends with record level of public feedback).

Brexit: both ESMA Chair Steven Maijoor and EU Commissioner Mairéad McGuinness MEP noted that the end of the Brexit transition period went relatively smoothly from the perspectives of financial services and financial stability. The CSD temporary equivalence decision was highlighted as being of key importance for Ireland (for more information, read our briefing: Brexit – CSD Temporary Equivalence and Settlement Finality: Update).

Sustainability: this is high on the financial services agenda both in Ireland and at EU level. EU Commissioner Mairéad McGuinness MEP noted that “the recovery must be green” and that substantial private investment in sustainable activities is needed so that the EU can achieve its 2030 and 2050 targets. The European Commission’s planned Renewed Sustainable Finance Strategy is keenly awaited.

Banks: in a speech focusing on resilience in response to the COVID-19 pandemic, Central Bank of Ireland Governor Gabriel Makhlouf highlighted that the euro-area banking sector has so far been resilient, but that the economic fallout from the pandemic will lead to deterioration in asset quality. He noted that loss-absorbing capacity is not without limits and lenders should continue to prepare for a wide variety of potential outcomes.

Capital markets: ESMA Chair Steven Maijoor discussed a potentially bigger role for retail investors in the capital markets. EU Commissioner, Mairéad McGuinness MEP observed that work on the Capital Markets Union hasn’t stalled and that it can take industry pressure and a crisis such as the COVID-19 pandemic to re-ignite interest in projects of this scale.

Gender balance: Minister for Enterprise, Trade and Employment Leo Varadkar TD commented that the pace of change remains slow, with insufficient representation of women in senior executive roles. This, together with the importance of diversity and inclusion to the culture and resilience of financial services firms, was also emphasised in the Ireland for Finance Action Plan 2021.