Central Bank governor defends position on Brexit investments
Philip Lane says regulator not responsible for promoting financial services sector
Philip Lane: he said one of the most attractive features Ireland could have for inward investment was a reputation for high-quality regulation
Central Bank governor Philip Lane has told a Fine Gael Senator that it is not the Central Bank’s job to promote the financial services sector in Ireland, and said its regulatory approach to firms inquiring about Brexit-driven investments here was appropriate.
The Central Bank has faced some criticism from the financial sector for its approach to inward investment, with some high-profile investments driven by Brexit recently going to other centres such as Luxembourg and Brussels.
In a strongly worded letter to Senator Neale Richmond , who chairs the Seanad Special Select Committee on Brexit, Mr Lane said the job of the Central Bank was to ensure financial stability and protect consumers, and the role of promotion was one for other State agencies.
Replying to queries from the committee about the role of the Central Bank, Mr Lane said from 2003 to 2010 it had been given “ an explicit mandate” under legislation to promote the development of the financial services industry while ensuring this did not undermine financial stability.
However, the Central Bank Reform Act 2010, which outlined a new direction for regulation after the crisis, removed this as one of the Central Bank’s objectives.
Mr Lane said that in a report on the crisis his predecessor as governor, Patrick Honohan, had said that the goal of promoting the sector “ may well have been in conflict”with the objective of ensuring financial stability.
The Central Bank had been put in a difficult position, Mr Honohan concluded, as the adverse effects of discouraging inward investment into the IFSC “were more immediate and real” than what were perceived as more distant concerns about financial stability.
“I am firmly of the view that the subsequent removal of the objective to promote financial services in the Central Bank Reform Act 2010 was the correct decision,” Lane writes in his letter.
“The promotion role can be fulfilled by other government agencies, allowing the Central Bank to focus on its twin regulatory goals of maintaining financial stability and protecting consumers.”
He said one of the most attractive features Ireland could have for inward investment was a reputation for high-quality regulation.