Financial regulation in Ireland: Should the regulator be the Central Bank?
| Date | 01 January 2001 |
| Pages | 42-55 |
| DOI | https://doi.org/10.1108/eb025061 |
| Published date | 01 January 2001 |
| Author | Jim Stewart |
| Subject Matter | Accounting & finance |
Financial regulation in Ireland: Should the
regulator be the Central Bank?
Jim Stewart
Received (in revised form): 21st September, 2000
School
of
Business
Studies,
Trinity
College,
Dublin;
e-mail:jstewart@tcd.ie
Journal
of
Financial Regulation
and
Compliance
Volume
9
Number
1
Jim Stewart is a senior lecturer in Finance
in the School of Business Studies, Trinity
College, Dublin. He has a PhD from the
London School of Economics. His research
and teaching interests include financial
regulation and corporate finance and he
has published a number of papers in
these areas. He has also written a number
of papers on pension funds and capital
markets and has co-edited two books on
European pension systems.
ABSTRACT
A new financial
regulator
has
been
proposed for
Ireland.
There is little debate about the princi-
ple of a single financial regulator but consider-
able debate as to whether the Central Bank
should retain this role or whether a new body
should be established. This paper
considers
this
issue in the context of
recent controversies
relat-
ing to tax evasion through use of the banking
system which have highlighted
some
of
the
diffi-
culties arising from the role of the Central Bank
as both a conduct of
business regulator
and pru-
dential/systemic regulator. The paper
concludes
that in the context of Ireland's membership of
the euro the
main
function of
the
financial regu-
lator is to focus on conduct of
business
issues
and this is most likely to be achieved within a
new institution.
INTRODUCTION
The Central Bank of Ireland, in addition to
its monetary policy role, is responsible for
regulating most Irish financial institutions
(the main exceptions are insurance compa-
nies and credit unions), as well as financial
markets including the Irish Stock Exchange
(ISE).
In October 1998 the Government of
Ireland agreed in principle to the establish-
ment of a single regulatory authority for
the financial services sector and appointed
an advisory group to make recommenda-
tions on the scope and functions of this
new regulatory body.1
The main recommendations of the advi-
sory group are that the proposed body
should be a 'a completely new organisation
outside, and independent of the Central
Bank'2 referred to as the Single Regulatory
Authority and that all financial services
should be regulated and licensed by this
body.3
Effectively the proposals involve remov-
ing regulatory functions from the Central
Bank to a new body and adding additional
regulatory responsibilities to this body.
Since the publication of the report in
May 1999 there has been considerable
debate relating to the form of financial reg-
ulation but there has been little debate
about the principle of
a
single financial reg-
ulator. The debate has largely centred on
whether the Central Bank should continue
its role as the main regulator of the finan-
cial system or whether a new body should
be established. As in the UK, large diversi-
fied financial firms are in favour of a single
Journal of Financial Regulation
and Compliance, Vol. 9. No. 1,
2001.
pp. 42-55
© Henry Stewart Publications,
1358-1988
Page
42
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