Central Bank of Ireland officials have warned that the US-Israeli war on Iran will test the resilience of Irish borrowers and the domestic financial system if a prolonged energy shock adds further fuel to inflation and continues to lower economic growth. In its first of two financial stability reports of 2026, the authority also highlights the risk that runaway stock market valuations, particularly related to artificial intelligence (AI), amplify the risk of a “disorderly correction” in global markets spilling over into the Irish financial system. Mark Cassidy, director of financial stability at the Central Bank, said that valuations in global stock markets are becoming “increasingly stretched” as investors bet big on AI, pushing stock indices to fresh records in recent weeks. Central Bank governor Gabriel Makhlouf, meanwhile, said the war in Iran and its effect on global energy and fertiliser markets is his top concern at the moment.“I’m worried about the geopolitical risks,” he said. “We have zero control over that. [ ...] Things have intensified and it’s not obvious today that there’s a path to returning all of that to some sort of normality.”More to follow ...