The head of the Central Bank has warned about soaring share prices on international stock markets and the potential for a "correction".
Gabriel Makhlouf said "high equity valuations are driven by US technology and artificial intelligence related stocks."
Mr Makhlouf added there was a "disconnect between elevated levels of economic uncertainty and stretched market valuations."
He said recent high profile bankruptcies in the US had raised questions about the lending standards of non-bank lenders.
He also warned about countries which had high levels of borrowings while the bond market was charging them relatively low interest rates.
Mr Makhlouf said "a sudden shift in sentiment could lead to unplanned fiscal corrections and wider market disruption."
The Central Bank Governor added that despite exposure to international developments Ireland's households and businesses still had relatively healthy balance sheets.
He said that even in adverse scenario "the number of firms in financial distress or households that would be unable to cover debt payments would be contained."
He was speaking as the Central Bank released its latest Financial Stability Review and decided to leave existing mortgage lending rules unchanged.
The rules, which have been in place for ten years, had led to "lower" mortgage arrears, he said.
He said the big challenge for Ireland was "sustaining" economic growth and added that he had written to Minister for Finance Paschal Donohoe about Ireland's infrastructure.
The Central Bank said that clarity on tariffs "led to a modestly improved global outlook", but the improvements in growth forecasts relied on current agreements being maintained.
Mr Makhlouf also said the bank was analysing the financial stability risks from Irish hedge funds.
The bank's Deputy Governor Vasileios Madouros said regulators were "analyising potential vulnerabilities and how they are being managed."
Mr Makhlouf said he would not have any concerns if PTSB, which is currently up for sale, was bought by a company which was not a bank.
He declined to comment on any discussions between the Central Bank and the Government about the sale.
The State currently owns 57% of the bank.
Gabriel Makhlouf also said he is very comfortable with the European Central Bank's current stance on interest rates.
"I'm very comfortable with where we are, but I accept that there's a load of uncertainty around that means we have to take a meeting by meeting approach," he said.
The Central Bank's Financial Stability Review is published twice a year and is one of the flagship publications from the bank.
