External Balance Sheet Risks in Ireland

Vahagn Galstyan and Valerie Herzberg
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Valerie Herzberg: Central Bank of Ireland

No 9/FS/18, Financial Stability Notes from Central Bank of Ireland

Abstract: Large external imbalances have been a persistent feature of most advanced economies, including Ireland. This is despite significant deleveraging of the Irish banking sector since the financial crisis. Given the presence of internationally oriented activities with little Irelandrelated business, early-warning indicator metrics related to the international investment position require adjustments in order to serve as useful monitoring tools.We propose to focus on a metric related to the net external debt liabilities of a narrow set of domestic Irish banks: a closer monitoring of the external balance-sheet risk is warranted when the net external debt liabilities of domestic banks exceed 17 per cent of modified gross national income.

Date: 2018-10
New Economics Papers: this item is included in nep-acc and nep-ban
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