Central Bank Governor Philip Lane has said that banks have already begun exploring the possibility of moving activities to Dublin following Britain's vote to leave the European Union.
The Brexit decision may jeopardise London's right to sell financial services across Europe.
"There has to be some level of relocation depending on how the Brexit negotiations go," Philip Lane said in an interview with Bloomberg Television in New York last night.
"The most important point for now is that it's way too early to tell. Institutions aren't in decision-making mode yet, they are essentially doing research," he added.
Ireland is seen as one of the favoured destinations for financial firms based in Britain that want to retain so-called "passporting" rights which allow them to do business within the EU.
Many banking functions are jointly supervised by the European Central Bank and the local regulator, Professor Lane said.
"If new business comes along we will be able to staff up to deal with it," he said.
While no firms have moved operations to Ireland yet, "more of the action at this point is vis-a-vis law firms and consultants" which advise banks on their how to handle the Brexit fallout, he added said.
It will be some time before the full ramifications of Brexit are known, the Central Bank Governor told Bloomberg TV.
"The UK has to decide what it's asking for and the EU has to respond to that request," Professor Lane said.
Ireland wants a "win-win" relationship between the UK and EU, he added.
While the Irish economy has recovered strongly, Professor Lane said the Government had to remain cautious in its outlook.
"The recovery has been a genuine one but there is still a long way to go and a lot of debt in the system," he said.
"There is nothing on the horizon now to say that there will be a significant reversal but we know Ireland is a small open economy."
"We have to recognise there are scenarios where that can go into reverse."
Meanwhile, Professor Lane also said that the European Central Bank must continue with its current strategies to lift inflation, but it will of course look at tools being pursued by other central banks including Japan's.
"In Europe we consider the current strategy to be working," he told Bloomberg TV.
"It is not the case that inflation has returned to target, so we have to continue with that strategy."
Asked if he was watching efforts by the Bank of Japan to control its yield curve, Professor Lane said he would look at strategies used by all major central banks.
"It's fair to say that all major central banks look at each other all the time to pick up lessons, so of course we will look with great interest as to how that unfolds," he added.
