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International Monetary Fund. Monetary and Capital Markets Department

. E. Vulnerabilities from the Non-Bank Sector 61. Market-based finance has expanded significantly in Ireland. In general, investment funds hold assets overseas and there are limited connections to the domestic Irish economy, with the notable exception of property funds invested in the Irish CRE market. 62. CRE is systemically important in Ireland and a disruption could have broader consequences for the financial system . The invested CRE market in Ireland at end-2020 is estimated to have a total value of EUR 53 billion. Banks have exposures to the CRE market

Andrea Deghi, Mr. Junghwan Mok, and Tomohiro Tsuruga

offices and hotels, as businesses adopt more liberal work-from-home policies and substitute online meetings for large in-person gatherings. These trends suggest that the CRE sector might still face challenges—especially for some segments—in the longer term. A sustained deterioration in the CRE market could affect financial stability. The CRE sector is large, its funding is concentrated, and increasingly relies on leveraged non-bank investors and cross-border capital flows. Historically, the CRE sector has been a source and amplifier of adverse macro-financial shocks

Andrea Deghi, Mr. Fabio M Natalucci, and Mahvash S Qureshi

almost twice as large in the pandemic (2020:Q1–2021:Q4) than in the pre-pandemic period (2016:Q1–2019:Q4) ( Annex Figure A1 ). The same holds for dispersion across CRE segments within cities, where a much larger variation in price changes is observed during the pandemic than before ( Annex Figure A2 ). Notably, these CRE price trends are quite different from those observed during the global financial crisis when the CRE market collapsed globally. Price declines were generally larger then but, on average, prices fell across all segments, while they have stayed

International Monetary Fund. European Dept.
This Selected Issues paper estimates the cyclical position of the Irish economy. Assessing the business cycle in Ireland is complicated by the open character of its labor market and large presence of globally active multinationals. However, analysis suggests that the Irish economy is in the midst of a cyclical upswing. All methods suggest a positive output gap in 2017, while the labor market shows signs of upward wage pressures, as net immigration has been weak so far. These signs are consistent with a cyclical upswing, amid strong estimated potential output growth, and point to risks of a boom-bust cycle, should the economy continue to push the growth momentum.
International Monetary Fund. Monetary and Capital Markets Department

. Structural Vulnerabilities: Assessment, Tools, and Recommendations BOXES 1. Bilateral and Tri-party Meetings Between the MoF, Norges Bank and the FSA 2. International Comparison of Debt Limits and the Use of Speed Limits 3. International Comparison of CRE Vulnerabilities 4. Use of Macroprudential Tools Geared Towards the CRE Sector 5. Key Characteristics of the Norwegian CRE Market FIGURES 1. Institutional Arrangements for Macroprudential Policy 2. Macroprudential Policy Actions since 2008 3. The Macroprudential Policy Process 4. Key Reports

International Monetary Fund. Monetary and Capital Markets Department

monitoring . The CRE market has been buoyant, with annual price growth exceeding 10 percent as of mid-2015. Domestic banks have reduced their CRE exposure, but international investors have picked up the slack. CRE is particularly sensitive to swings in sentiment about economic prospects. Since many firms rely on CRE as collateral to support their borrowing, a fall in prices could tighten corporate credit constraints, reducing business investment and economic activity. Continued efforts to address supply constraints are important . The government has undertaken a number

International Monetary Fund. European Dept.

capital needs in the crisis. Property Prices (Index, 1995Q1=100) 600 Sources: CBI; IPD; and OECD. 3. Commercial property markets are now bouncing back rapidly from their lows suggesting a potential risk of return to the boom-bust with spillovers to the banking system . Since 2013, the Irish CRE market has performed strongly, characterized by buoyant investment volumes, and fast moving property prices and rental growth. A lag in new construction to meet demand has been driving vacancy rates down to historical lows and some indicators suggest valuations are

International Monetary Fund. Monetary and Capital Markets Department
While Norway’s institutional arrangement for macroprudential policy is uncommon, the authorities have shown strong willingness to act. The Ministry of Finance (MoF) is the sole macroprudential decision-maker in Norway, which is rare in international comparison. However, Norges Bank and the Finanstilsynet (FSA) play important advisory roles. In recent years, the authorities have taken substantive and wide-ranging macroprudential policy actions in response to growing systemic vulnerabilities—and these seem to have been effective in slowing down some of the riskier trends. The macroprudential policy toolkit is well stocked and actively used.