The Central Bank has criticised the report on the new single regulator for the financial sector as "deeply flawed".

The board of the Bank said it is concerned that if the Government accepts the recommendation to set up a new "greenfield" regulator it would be taking a high risk.

The report, drawn up by an advisory group chaired by Mr Michael McDowell, argues that the lack of accountability of the Central Bank is a key reason for setting up a new regulator.

But in a statement, the bank board said the governor and the board of the Bank were accountable to the Oireachtas in the exercise of their regulatory functions.

A spokesman for the Bank said the governor was accountable to the board and could be requested to consult with the Minister for Finance.

"The fact that he cannot be dismissed by a Government is a very thin plank to decide that the Bank cannot carry on its involvement in regulation," he added.

Under legislation governing most European central banks the governor can only be dismissed by the president on a unanimous board's recommendation - and for serious reasons.

The statement added that the board - chaired by Mr Maurice O'Connell and including nine Government nominees - fully recognised the need to rationalise and improve the protection of consumers of financial services.

It said it put forward "constructive proposals" on those to the advisory group.

The main risks in setting up a new institution, it says, would be the loss of regulatory expertise and difficulty in establishing an international reputation, as the new authority would lack the international contacts and track record.

"The Bank has an excellent record on prudential regulation and enjoys a high status internationally, which is hugely important to the continuing development of the IFSC."