Credit union chief executives have recently criticized the Central Bank’s regulations on the sector, calling them “excessive and unjustified”. After conducting research, a group of CEOs from credit unions across Ireland, chaired by Queen’s University Belfast professor Donal McKillop, have claimed that under the Central Bank’s current regulations, Irish credit unions are forced to set aside unjustifiably high levels of their capital into reserves, much higher than that of Irish and European banks.
Under the Central Bank’s current rules, credit unions must set aside a minimum of 10 percent of their total assets in reserves. This means that when a credit union member saves €100 with a credit union, the credit union must then put €10 in its reserves, if a member saves €1000, the credit union must put €100 in reserves, and so on. In its research paper, the Credit Union CEO Forum deemed these rates “excessive” and many credit unions have put limits on amount of savings they will accept from members, with some capping savings at just €10,000.
The CEO Forum’s paper states that these reserve capital …
