The Central Bank is to decide by the end of September whether to introduce credit limits for banks to prevent a repeat of the reckless lending that fuelled Ireland's financial crisis.
In an update to its banking supervision strategy, the Central Bank said it would publish its position on credit limits in the third quarter and implement any policy changes this year.
In its strategy paper, the Central Bank said it wants lenders to improve the quality of their financial statements, including increasing provisions for bad debts, in line with recent stress tests, which required a fresh €24 billion injection of capital into four banks.
So far, the bill for bailing out the banks, including Bank of Ireland, Allied Irish Bank, Irish Life & Permanent and EBS Building Society, is €70 billion.
"We are seeking to ensure financial statements are prepared on a more conservative, prudent and consistent basis that, over time, will enhance trust in Irish banks' financial statements," the Central Bank said.
The Central Bank, which took control of banking supervision in 2010 when it merged with the financial regulator, wants lenders to disclose their definitions of impairments and the timing of write-offs.
Under the terms of the EU-IMF bailout, Ireland's four remaining lenders need to shrink their balance sheets by €70 billion by 2013 to reduce their reliance on emergency ECB and central bank funding which amounted to €128 billion at the end of May.
The central bank said it would consider sanctioning banks if they fail to meet deleveraging targets.
Agencies