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Marc Rubinstein

The Banking Market Where Profits Are Guaranteed

Customers in Ireland pay the price of bolstering lenders, just as they did for bailing them out.

Daily Life In Dublin During COVID-19 Lockdown
Photographer: NurPhoto/NurPhoto

At the heart of banking regulation sits a tradeoff between competition and financial stability. Competition allows consumers access to better prices and better products. But it can also encourage banks to do wayward things, often at the expense of soundness. Faced with the choice, regulators typically come down on the side of safety.

Regulators in Ireland have adopted this thinking with zeal since the implosion of their banking system amid the global financial crisis almost 15 years ago. In 2008, Irish banks collapsed under intense funding pressures, which persisted through to 2010 as initial support proved inadequate against the worldwide forces at play. The cost of the international bailout to Irish taxpayers was about 45.7 billion euros ($46 billion).