The Government is pushing for a rethink of a European Commission plan to impose capital buffers on money market funds. It believes that the move could damage the International Financial Services Centre.
Brian Hayes MEP met the new EU Financial Services Commissioner, Jonathan Hill, this week in Strasbourg to set out Ireland's position on the issue and on other financial services priorities.
Mr Hayes (FG), a former junior finance minister, was appointed earlier this month as the main negotiator for the European People's Party on the Money Markets Funds proposal, a key piece of EU legislation. It is due to come before the European Parliament and Council in the coming months for fresh negotiations.
Speaking after an hour-long meeting in Strasbourg, Mr Hayes said Lord Hill was the right choice for Ireland’s financial services and for the EU. “I think he has a much more realistic view about the necessity of keeping the financial services industry in Europe competitive . . . he’ll take a stand against the one-world regulation view that often comes from the European Commission.”
The Republic is the main base for money market funds in Europe, with assets of around €290 billion, accounting for around one third of the Irish funds industry. Luxembourg, Britain, the Netherlands and France are other main centres.
Cash buffer
The Money Markets Funds proposal was one of a number of regulation proposals unveiled by outgoing EU internal markets commissioner
Michel Barnier
during his tenure at the European Commission. But a proposal to make money market funds build up a cash buffer equivalent to 3 per cent of their assets – fiercely opposed by the financial services industry – was postponed in March.
The Minister of State for Finance Simon Harris (FG) outlined his opposition to capital buffers on money market funds in an interview with Bloomberg. "To go ahead with a capital buffer structure as a regulatory instrument would damage the industry here, but also throughout the EU, and could lead to an outflow of investment," he said.
The appointment of Britain’s commissioner-designate Lord Hill as Financial Services Commissioner, pending approval by the parliament, has stoked hopes that the proposed legislation can be watered down.
It is understood the Government’s four MEPs will vote in favour of Lord Hill, despite concerns about the former lobbyist’s suitability for the role.
Along with Mr Hayes, Sinn Féin’s Matt McCarthy is the only other Irish MEP on the economic and financial affairs committee, which will question Lord Hill at a three-hour public hearing on October 1st.
Speaking to The Irish Times, Mr McCarthy said that while he had not yet decided whether to support Lord Hill, he would question his links with the City of London.
“I don’t necessary believe that less regulation is a good thing. Ireland should be one of the first to recognise that.”
