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Central Bank issues positive financial stability assessment

Published 08/11/2006

The Central Bank has issued a positive assessment of the stability of the Irish financial and economic system over the coming months.

In its latest Financial Stability Report, the bank says the ongoing strength of the Irish economy is keeping the financial system stable and all indicators point to solid economic growth over the next year.

It also says the international environment is generally favourable, which is important for Ireland given the open nature of the country's economy.

The Central Bank does point to some potential risks, however, including the economy's continued over-dependence on the construction sector, which it says is unsustainable in the medium term.

It also warns of the risks posed by ongoing high debt levels and the potential threat to the global economy from volatile energy prices.

In relation to house prices, the Central Bank says it believes they have been over-valued in recent years, but a recent slowdown is welcome news and a soft landing is still more likely than any price falls.

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