Quinn tries to reassure bankers on EU matters

THE Minister for Finance Mr Quinn did not promise any miracles at the Institute of Bankers annual dinner last night. But he assured the bankers that he would do all in his power to make progress on issues affecting them during the Irish Presidency of the European Union.

New proposals on solvency ratios, payment systems and cross border credit transfers were serious issues in the banking industry, which required serious consideration, he said. Mr Quinn said he would meet bankers representatives "in the near future" to discuss concerns raised by the Irish Bankers Federation about the Central Bank Bill which was published on October 7th.

Mr Quinn told the Institute of Bankers' annual dinner in Dublin that he intended to use the Irish presidency to make progress on a number of issues in the area of investor compensation and protection. With examinations underway on the system of regulation of Irish investment intermediaries, Mr Quinn said he wanted to have the EU Investor Compensation Directive adopted before the end of the year.

Stressing the Government's commitment to the ongoing development of the International financial Services Centre, Mr Quinn promised that the legislation needed to facilitate new products and developments within a proper regulatory framework would be introduced.

"It is only by keeping continuously up to date with new developments in the financial services industry that Ireland will remain in the forefront of the international financial services sector and share in the opportunities which arise from this rapidly evolving industry," he said.

On preparations for European Monetary Union, he said he was concentrating on three separate but related areas during Ireland's EU presidency. These are the future relationship between the euro, and the currencies of non participating member states, budgetary discipline in participating member states and the legal framework for the use of the euro,

Providing for the future relationship between the euro and currencies of non participating member states would require a new exchange rate mechanism which would provide continuity with the present ERM and help prevent unwarranted exchange rate movements between the euro and the other currencies, he said.

He stressed the importance of strengthening budgetary discipline in EMU member states. "Issues of currency stability and budgetary discipline are, of course, closely linked because one of the essential requirements for currency stability is a sustainable - fiscal policy. Together they will help form a sound framework for stability in EMU," he said.

Welcoming the Minister, institute president Mr John Wright stressed the "keen interest" of the banking industry in EMU. Stating that it would herald new challenges for bankers, the chief executive of the Northern Bank and National Irish Bank said it would be good for bank customers.

Globalisation and technological innovation are the other major challenges facing the banking industry, he said. Banking has undergone more change than most, industry and traditional distinctions have been blurred he said. "It becomes increasingly difficult to determine when a bank stops being a bank and becomes an insurance company or indeed a supermarket chain," he said.

Despite this convergence he expressed concern that banks and insurance companies and a raft of other organisations selling broadly similar products had different regulators and supervisory processes. In the decade ahead Mr Wright said he believed banks would face their toughest competition not from other financial institutions but from different kinds of enterprises such as telecommunications companies, large retailers, media organisations, and utility companies.