Dáil Éireann Debate, Thursday - 15 December 2022
206. Deputy Brendan Smith asked the Minister for Finance if it is proposed to lower the requirement for credit unions to retain 10% of deposits, given that other countries in Europe have a requirement of 3% or 4% retention; and if he will make a statement on the matter. [63110/22]
Amharc ar fhreagraA new policy framework for credit unions was implemented by Government following a report from the Commission on Credit Unions in 2011. The revised framework provided certain powers to the Central Bank to regulate credit unions, including a power to set minimum regulatory capital levels.
It is important to remember that in its capacity as regulator, the Central Bank is independent of Government, and that this is for good reason.
The Central Bank has set a requirement for all credit unions to hold minimum regulatory reserves of 10% of assets. Reserves are required to protect members’ savings and provide a level of financial resilience to credit unions in the event of adverse events. Adequate reserves are key to maintaining member confidence and on-going sector stability. I am advised by the Central Bank that, as of 30 September 2022, the average level of reserves held across the credit union sector was approximately 16%.
The capital framework for most credit institutions in the EU derives from the Capital Requirements Directive/Capital Requirements Regulation, which credit unions are exempted from. It is a matter for relevant authorities in Europe to set the appropriate capital/reserves requirements for the various categories of financial firms for which they have supervisory responsibility, taking account of risks and other firm/sector characteristics.
