In his annual letter to the Finance Minister, Gabriel Makhlouf says it should be a policy priority to support household resilience, and to address any barriers that prevent domestic businesses from getting finance.
There is now an increasing policy push, including from Brussels, to encourage households not to leave spare cash on deposit in banks, earning little interest, and to ensure individuals put aside enough for what could be long retirements.
More retail participation would also support Irish and European capital markets, which have suffered an exodus of firms to US stock exchanges.
Research published by the Central Bank last December found that while Irish households tend to have property and to hold significant sums in cash and deposits, participation in capital markets-based investments is low and many are not adequately providing for their long-term future.
“A picture emerges of a wealthier cohort in society well-served by the existing structures of the investment market,” the consumer research and analysis concluded. “There is a sense that investment is not accessible to all and that it is the preserve of wealthier cohorts in society.
“As a result of this many households in Ireland are not getting the full benefit of what financial services could do to help them provide for their future.”
In his letter to Finance Minister Simon Harris, Mr Makhlouf says there is an increasingly urgent need to build economic resilience because of the challenges Ireland and Europe are facing.
Among the priorities he sets out are delivering the necessary infrastructure in housing, transport, energy and water, and strengthening the indigenous business sector, so that it complements FDI activity.
“A policy focus on fostering domestic business dynamism and investment, including the adoption of new technologies, by indigenous firms will be important in driving this growth,” he said.
The governor also advises Mr Harris to follow a prudent fiscal policy and “rigorous” expenditure control, in order to manage longer-term challenges “as well as to mitigate the risks from a narrow and over-concentrated tax base”.
Mr Makhlouf said that in terms of the regulation and supervision of the financial sector, the Central Bank’s priorities for 2026 include ensuring that firms have implemented the revised Consumer Protection Code, which comes into effect in March.
The regulator will also look to apply the code to all credit union-regulated activities from 2027, and a public consultation process on this proposal is underway.
source