Business Irish

Friday 22 June 2018

Financial system must be resilient to cyber risk - Draghi

European Central Bank president Mario Draghi, pictured in Dublin yesterday, said adopting local measures, not monetary policy, was the way to tackle housing problems Photo: PA
European Central Bank president Mario Draghi, pictured in Dublin yesterday, said adopting local measures, not monetary policy, was the way to tackle housing problems Photo: PA
Colm Kelpie

Colm Kelpie

The banking and financial systems are much more ready now to weather any future financial crises, European Central Bank boss Mario Draghi has said.

On a visit to Dublin, Mr Draghi told students at Trinity College that many actions had been taken to make the banking system more resilient.

"I would say that since the crisis the whole regulatory and supervisory framework has been overhauled. Now, we can safely say that the banking system, and to some extent the financial system at large, is much more resilient against future crises," Mr Draghi said.

Mr Draghi also signalled his support for the Central Bank of Ireland's mortgage cap, saying house price increases were taking place across Europe, but the problem is not "systemic".

"The answer is quite often factors like supply shortages, building permits, lack of social housing, [they] are the main causes of these increases in house prices," Mr Draghi said.

"If there are problems, and where there are problems, they should be tackled with local measures, not through monetary policy.

"What are these measures? Some of them have to do with macro-prudential measures. You have loan-to-value ratios for borrowers and other types of measures."

Mr Draghi also said cyber risk was the dominant theme in the "realm of digitalisation".

He said he would expect that any new technical innovation that could change the way central bankers carry out their roles will have to be viewed with this in mind.

"How resilient is this? How much is our exposure to cyber risk going to go up, because we embrace new technology?

Wrapping up the question-and-answer session, Mr Draghi strayed from his pronouncements on monetary policy and financial matters to gave some advice to the students

"Stay curious," he said. "Learn from the world. Curiosity is what drives you to explore job opportunities, to explore different environments, and also to be creative. Never lose your courage, of course."

Earlier at a speech to students and academics, Mr Draghi warned that Europe needs to tackle high youth unemployment to safeguard democracy, public trust and growth.

"We have seen how in several countries the weight of the crisis has fallen disproportionately on the young people, leaving a legacy of failed hopes, anger and ultimately mistrust in the values of our society and in the identity of our democracy.

"With a large proportion of young people not having any defined role in society, there is a high risk of social cohesion and of trust in public institutions being undermined."

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business