The Tanaiste, Ms Harney, has backed the recommendation by a Government-appointed committee to establish a new authority to replace the Central Bank in its regulation of financial sector.
Ms Harney confirmed her views after addressing a conference on international financial services. Her approach is at odds with the Central Bank, which she referred to as "a sectoral interest", Department of Finance officials, and International Financial Services Centre fund managers. Ms Harney said it would be foolish to ignore the findings of the advisory committee, chaired by Mr Michael McDowell SC, which had "the widest possible brief" and had called for a regulator independent of the Central Bank.
Earlier, the governor of the Central Bank, Mr Maurice O'Connell, said his views in support of its existing role were "well founded". In response to a speaker in the audience, he said that two reports published by the OECD had endorsed the Central Bank's role although they had received little attention.
The World Competitiveness Report ranked the State at third place on the quality of its financial regulation and the Financial Action Task Force recently complimented the Bank on its role in the enactment of money laundering legislation, and its internal guidelines, controls and training procedures. Mr O'Connell defended the Central Bank against the charge of not being accountable, saying he was accountable to the Central Bank board, the Minister for Finance, and, in the final instance, the Oireachtas.
Mr Anthony Carey, the chairman of the Dublin Funds Industry Association, said the "baby should not be thrown out with the bath water" by divesting the Central Bank of its current role, where it regulates all of the financial industry except for the insurance sector. The decision to establish a single regulatory authority did not preclude the Central Bank from performing such a function, he added, warning that it would take time for a new authority to attract the right skills and gain a reputation internationally.
Mr Carey is a vice-president of Chase Manhattan Bank, one of 20 international banks with branches at the IFSC.
