The Central Bank has claimed victory in its two-year battle to retain control of the banking industry. The new regulatory structure for financial institutions revealed by the Minister for Finance, Mr McCreevy, and the Tanaiste, Ms Harney, has left it in charge of regulating financial institutions, it stated.
A Bank spokesman said that the organisation would continue to carry out the same functions as before, but would be divided up differently internally.
Yesterday's announcement was meant to bring an end to a two-year stand-off between the Mr McCreevy and Ms Harney. The Tanaiste had wanted to strip the Bank of its powers following several significant failures of the regulatory system, including the DIRT and Ansbacher controversies.
Mr McCreevy favoured a new regulator, but within a reorganised Central Bank. The scheme unveiled yesterday most closely resembles the wishes of Mr McCreevy, although both the Minister and the Tanaiste were at pains to present the restructuring as a new departure.
Under the complex plan, the Central Bank is to be replaced by the Central Bank of Ireland and Financial Services Authority. It will have two "pillars" - one dealing with monetary policy and the other with regulatory matters.
Monetary policy will be handled by the Irish Monetary Authority and will be the Irish arm of the European Central Bank. It will share a chairman, or governor, with the CBIFSA, and the first holder of the post will be Mr Maurice O'Connell, the current Central Bank Governor. The Irish Financial Services Regulatory Authority will handle regulation and consumer protection. It will have a great deal of independence and its own chairman directly accountable to the Minister for Finance, but it will have to work with the CBIFSA and IMA in many areas.
The incorporation of the Central Bank into the name of the new body and the combining of the role of head of the IMA with that of governor of the umbrella body will ensure that the Bank's culture permeates the structure.
A spokesman for the Consumers' Association welcomed the announcement, saying that the IFSRA should be able to create its own policies on regulation and consumer protection.
Labour's finance spokesman, Mr Derek McDowell, described the arrangement as a "classic fudge".