Regulation

Central Bank introduces new measures on sterling liability driven investments

The regulator in Luxembourg, the Commission de Surveillance du Secteur Financier, also announced a framework

Gabriel Makhlouf, governor of the Central Bank of Ireland, said “the macroprudential measures announced today aim to safeguard resilience”. Picture: Patrick Browne

The Central Bank of Ireland has introduced a buffer requirement for liability driven investment funds denominated in Sterling, in order to “safeguard resilience” against UK interest rate shocks.

Following a consultation paper on the issue, the Irish regulator has installed a requirement that these funds “maintain sufficient resilience” to withstand sudden and adverse shocks to UK interest rates.

Liability driven investments (LDI) are often used by pension funds to ensure they have cashflows to cover ...