and an over-reliance on construction induced tax revenue.
Indeed the Nyberg Report states that the speed and severity of the Irish crisis was exacerbated by world-wide economic eventsbeyond domestic control
however this essay subscribes to theview of Regling and Watson who note that there was scope tomitigate the risks of a boom/bust cycle through prudent fiscal andsupervisory policies, as well as strong bank governance – thusraising the chances of a ‘’soft landing’’ for the property marketand for society at large.
Prudential can be defined as careful, of relating to good judgmentor showing care and forethought. In a financial context prudentialregulation can therefore imply savvy financial planning andconscientious oversight. The concepts of supervision andgovernance are also interlinked with prudential regulation.Ireland and its own financial system having been “caught up inthe mass psychology of an unprecedented property bubble”
found itself exposed to massive solvency and liquidity risksrequiring unprecedented State recapitalisation
which shouldhave been at least mitigated by means of effective prudentialregulation. This essay contends that a new regulatory frameworkmust be introduced and an enlightened attitude to regulationshould be adopted by banks and financial regulators alike.
Patrick Honohan, “The Irish Banking Crisis Regulatory and Financial Stability Policy 2003-2008”(2010) at pg 6
Peter Nyberg, “Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland” (2011) at pg 91
Klaus Regling and Max Watson, “A preliminary Report on the sources of Ireland’s Banking Crisis”(2010) at pg 5
Patrick Honohan, “Resolving Ireland's Banking Crisis” (2009) 40(2)
The Economic and Social Review 207
Karen Collins, “Irish Financial Regulation: Failures and Reforms” (2011) 18 (6)
Commercial Law Practitioner
at pg 1