On a stiflingly warm early Irish summer day, a besuited Vasileios Madouros sits in his corner office overlooking the river Liffey and Dublin\u2019s docklands, looking cool and collected. <\/p>\n
This kind of heat is probably nothing too troubling for a native Greek who made Ireland his adopted home some seven years ago, when he was appointed director of financial stability at the Central Bank of Ireland. Now deputy governor responsible for monetary and financial stability, Madouros has had a busy time of late. <\/p>\n
On top of fielding questions from reporters about the Central Bank\u2019s first Financial Stability Review (FSR) of 2026, the economist also delivered a speech at an industry conference in Croke Park. <\/p>\n
The consummate central banker, Madouros is not at home when answering questions about himself. He clams up when asked about his ambitions and motivations, politely laughing off the more probing questions. Some of his reticence can be put down to Central Bank policies, but it\u2019s clear he\u2019s also not comfortable when the conversation moves in that direction. <\/p>\n
\u201cAre we actually going there?\u201d he asks with a nervous peel of laughter in response to what seemed like a harmless question about his favourite Greek restaurants in Dublin. \u201cI can\u2019t actually advertise places,\u201d he ventures, still chuckling, \u201cbut there is a place I go for my gyros.\u201d <\/p>\n
Ask Madouros about matters of policy or macroeconomic upheaval, however, and his answers are expansive and well informed.<\/p>\n
At the moment, Madouros is thinking a lot about what the industry calls tokenisation. He recently delivered a speech at the National Finance Conference in Croke Park, outlining, in broad strokes, the new \u201cjuncture\u201d at which the financial system and its supervisors find themselves in light of this latest technological shift. <\/p>\n
\u201cUltimately, it\u2019s about embedding a new technology in the plumbing of finance,\u201d he says. \u201cSo, it\u2019s the way finance works, in terms of the architecture, the technological architecture [\u2026] ultimately the retail investor or the bank customer won\u2019t care about that, because they don\u2019t see the plumbing.\u201d<\/p>\n
What they will care about, however, is how the technology affects them. \u201cWhat they\u2019ll see, if it is done well, is a financial service that can be more efficient, and existing financial services that are more efficient, faster, and less costly. That would have benefits for businesses and households in the broader economy.\u201d<\/p>\n
So, what\u2019s it all about? It goes back to the idea of the blockchain, which will be familiar to anyone who has either invested in, or kept abreast of, the rise of crypto assets over the past decade. Madouros explains it like this: traditional banking is based on a system of physical ledgers. <\/p>\n
\u201cEvery bank deposit,\u201d he says, \u201cevery loan, every security is recorded on a ledger. That ledger is maintained by individual financial institutions, and when there\u2019s a transaction \u2013 when you and I make a transaction \u2013 there is a very well-established and very important process of updating the ledgers of different institutions and reconciling them.\u201d<\/p>\n
The downside of the \u201cwell-established\u201d traditional ledger system is that it is \u201ccostly and it can also add time\u201d, Madouros says. That explains why traditional banks and other financial institutions are increasingly interested in blockchain and so-called distributed ledger technology (DLT). <\/p>\n
Until now, the blockchain has been best understood as an alternative to the bank-to-bank system. Instead of centralised ledgers, information relating to transactions is stored in what the Central Bank has described previously as \u201cone big public file \u2013 or ledger \u2013 that is shared and stored across a huge network of computers\u201d. <\/p>\n
There are two basic benefits to DLT, Madouros says. The first is that parties to a transaction can \u201cagree on the updating of the shared ledger simultaneously\u201d, cutting down on the time involved. <\/p>\n
\u201cSecond, you have this ability to have programmability,\u201d he says. <\/p>\n
In a nutshell, this means DLT can create a situation where transactions are only executed and settled based on \u201cpre-determined information\u201d. This is sometimes referred to as a smart contract.<\/p>\n
Example<\/p>\n
If that sounds a little diffuse, Madorous gives a concrete example. \u201cLet\u2019s say you\u2019ve ordered something online with a smart contract,\u201d he says. \u201cYou might only be able to pay for it when the parcel is actually delivered. This is a retail example, but you can think of it being applied to businesses [that have] very complicated supply chains.\u201d<\/p>\n
That sort of service, which can \u2013 again in theory \u2013 remove some of the frictions of cross-border payments, could have big benefits for a small open economy like Ireland, in which trade is a \u201cbig engine for growth\u201d.<\/p>\n
These are just some of the new types of services that tokenised finance can help to deliver, Madouros says.<\/p>\n
The reality, however, is that the technology and its application within mainstream finance are in their infancy. <\/p>\n
\u201cAs I mentioned in the speech, if you were to fast forward 10 or 20 years, we don\u2019t know exactly what\u2019s going to happen in the future,\u201d Madouros says. \u201cBut it does seem likely that the use of shared programmable ledgers and the tokenisation of financial assets in the financial system is going to become increasingly embedded.\u201d<\/p>\n
If the shift is only coming into view, why are the deputy governor and his colleagues so engaged with DLT now? \u201cOne of the dimensions of our strategy,\u201d he says, \u201cis to be future-focused.\u201d The reality is that aside from the benefits that Madouros and others believe tokenisation can bring, it also raises knotty questions for regulators and consumers. <\/p>\n
\u201cYou need the whole system to evolve. To adjust, in some cases, to work together to get towards better outcomes, because there is a different potential scenario, a different evolution, where there isn\u2019t this co-ordination across the system, and you could end up in a world where it\u2019s more fragmented, it\u2019s more siloed, it\u2019s actually more risky.\u201d<\/p>\n
The other reason for the Central Bank\u2019s interest in tokenisation is that \u201cmarket interest is growing significantly\u201d, Madouros says. <\/p>\n
\u201cWe are moving from a world of more experimentation to very early adoption.\u201d<\/p>\n
Stablecoins<\/p>\n
Earlier this month, Bank of Ireland and AIB announced they were joining a growing cohort of European banks working on developing a euro-denominated stablecoin, backed by bank deposits and other assets, to maintain a stable price. <\/p>\n
Stablecoins are similar to crypto assets<\/a> in that they are supported by blockchain technology. However, unlike bitcoin<\/a> and ethereum<\/a>, which are subject to wild value fluctuations, they are often pegged 1:1 to the value of a traditional asset, typically a currency such as the US dollar.<\/p>\n Called Qivalis, the joint venture between 37 euro area banks is difficult to separate from a growing concern within the euro system about the meteoric rise of stablecoins, most of which are currently denominated in US dollars. <\/p>\n This is a troubling prospect for European Central Bank (ECB) president Christine Lagarde, who recently said that US stablecoins risk \u201centrenching dollar dependency\u201d, which is presumably all the more troubling given the increasingly anti-European character of mainstream US politics right now. <\/p>\n In his own speech last week, Madouros echoed those concerns, citing ECB research indicating that any large-scale substitution of retail bank deposits for non-bank stablecoins could \u201cweaken\u201d Frankfurt\u2019s grip on its own monetary policy. <\/p>\n On the surface, it seems the ECB should be pleased with the Qivalis project. Other commentators, however, have characterised it as an attempt by the private sector to steal a march on Frankfurt\u2019s digital euro project, part of an ongoing \u2013 and age-old battle \u2013 over the future of money. <\/p>\n Madouros is conciliatory in his tone and doesn\u2019t accept this public versus private dichotomy. \u201cCoexistence\u201d is the word he uses to describe the relationship. <\/p>\n \u201cIf you look at what\u2019s happening at the moment, we have different forms of public and private money. We have cash, we have bank deposits, we have what\u2019s called e-money. They all coexist, and how people use them depends on their own preferences, depends on the offering of the financial system, and it depends on the specific use case and reason why a payment is being conducted.\u201d<\/p>\n With that in mind, Madouros says it\u2019s likely that \u201ca similar set-up\u201d will exist in the future.<\/p>\n Geopolitical landscape<\/p>\n That future is a troubling place for central bankers \u2013 and the rest of us \u2013 at the moment. Earlier in the week, Madouros and his colleagues delivered their first of two FSRs this year. It\u2019s clear the mood in North Wall Quay is rapidly darkening against an increasingly fragile geopolitical landscape. <\/p>\n With no end in sight to the turmoil in energy markets caused by the US-Israeli strikes on Iran, Central Bank governor Gabriel Makhlouf<\/a> told reporters that the outlook for global oil prices was now closer to the \u201cadverse\u201d scenario the bank\u2019s forecasters set out in March, meaning Irish inflation<\/a> could accelerate above 3 per cent this year.<\/p>\n The financial regulator is also worried about the artificial intelligence-driven surge in global stock prices to a string of new records in recent months, amplifying the risk of a \u201cdisorderly correction\u201d internationally that could spill over into the Irish financial system. <\/p>\n It\u2019s a case of choose your poison, but what is it that keeps Madouros up at night? It\u2019s the potential for a \u201cconstellation of shocks\u201d to emerge, he says, \u201cthe potential that one might trigger the other, for example, or they might happen kind of at a similar time, and there are linkages\u201d.<\/p>\n Madouros explains: \u201cIf there were to be a prolonged energy disruption \u2013 economic activity taking a hit, potential effects on inflation \u2013 that could trigger reassessment of some of the kind of prospects of some of the heavy AI investment; it could trigger some reassessment of financing for private credit. <\/p>\n \u201cThese two could then interact, and you could have an interaction between some of the potential shocks, and then also more broadly trigger a possible repricing across global financial markets.\u201d<\/p>\n A financial crisis, in other words, the conditions for which the European Central Bank last week warned that the Trump administration was in danger of creating with its trade policy and war in Iran. <\/p>\n A native of Athens, Greece, Madouros studied in the UK and spent more than 12 years as an economist at the Bank of England, where he had a front-row seat to what is now widely referred to as the Great Financial Crisis of 2008 and the punishing recession that followed. To a large extent, his home country\u2019s painful experiences during that period must have shaped his worldview and approach to the role he now occupies. <\/p>\n \u201cI wouldn\u2019t want to fully frame it like that, Madouros says. \u201cBut it has kind of left me, from these three experiences [the Greek, the British and the Irish], a really, really important appreciation of the costs of financial crises on society.\u201d<\/p>\n These costs, he says, are \u201csubstantial and persistent\u201d. In the case of Ireland, some of those lingering symptoms are \u201caffecting the next generation of people in terms of … housing construction and housing costs\u201d.<\/p>\n As an economist, he says he\u2019s not particularly surprised that much of the conversation around domestic economic debacles \u2013 whether it\u2019s housing, infrastructure investment or other matters \u2013 fails to tie our current predicaments to the real, scarring impact of the post-2008 experience. <\/p>\n \u201cPeople tend to focus on the issues that they\u2019re facing, the kind of issues that they\u2019re facing on a day-to-day basis, which are very important.\u201d <\/p>\n Equally important, however, is that central banks maintain their \u201cinstitutional memory\u201d of crises and their tangible effects. <\/p>\n \u201cIf you think about the State overall,\u201d Madouros says, \u201cit\u2019s really important that you have institutions and actors that maintain that kind of longer memory, yeah, and also look further into the future.\u201d<\/p>\n CV<\/p>\n Name: Vasileios Madouros.<\/p>\n Job: Central Bank of Ireland deputy governor, monetary and financial stability<\/p>\n Age: 43<\/p>\n Family: My partner Daniel, and our dog, Maggie.<\/p>\n Hobbies: Long walks with Maggie, especially on the beach. She\u2019s a bundle of energy (and a source of joy). And I love the sea.<\/p>\n Something we might expect: Like many of my colleagues at the Central Bank, what ultimately drives me is serving the public interest. That\u2019s at the heart of our mission \u2013 and it\u2019s great to have found this alignment in purpose and values. <\/p>\n Something that might surprise: In my early 20s, contrary to my every instinct, I tried parachuting and jumped out of a plane. It was a once-off, but an amazing experience. Let it not be said that central bankers are excessively risk averse.<\/p>\n","protected":false},"excerpt":{"rendered":"On a stiflingly warm early Irish summer day, a besuited Vasileios Madouros sits in his corner office overlooking…\n","protected":false},"author":2,"featured_media":519709,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[174],"tags":[214,13850,79,22767,179,18,28294,19,17],"class_list":["post-519708","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-bitcoin","tag-blockchain","tag-business","tag-central-bank-of-ireland","tag-economy","tag-eire","tag-gabriel-makhlouf","tag-ie","tag-ireland"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116696320885868228","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/519708","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=519708"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/519708\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/519709"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=519708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=519708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=519708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}