Finance committee meeting the Irish Central bank Friday 20th of October 2017

Official transcript is here: http://oireachtasdebates.oireachtas.ie/Debates%20Authoring/DebatesWebPack.nsf/committeetakes/FPJ2017101900002?opendocument#C00100

Banking Regulation in Ireland.

The Central bank of Ireland is the body of civil servants that are charged with responsibility for regulating the banking sector in Ireland.

There are two banking systems in Ireland, a domestic Irish banking system and an International banking system.

The Irish banking system is made up of Irish banks mainly trading Ireland with some trading outside the country. The activities outside Ireland are regulated by the body in that country.

The Irish trading is governed by the Irish Central Bank, and, this activity is part of the Irish banking system.

The Irish Central Bank had to attend a televised meeting with a group of parliamentarians on Friday 20^th of October 2017.

The civil servants spoke freely and as openly as they could. They didn’t betray any confidences they may have given to anybody. The governor of the Irish Central Bank even thanked the parliamentarians for the opportunity to speak to them and seemed to ask for more opportunities to do it again and even implied they would like to do it more often.

All in all, it was a good meeting, and information passed freely.

The problem arises with what appeared to be a naivety on behalf of the civil servants.

During one exchange the Irish Central Bank revealed they could not regulate every bank in the country. They had no intention of investigating every incident, and in particular, they were not really paying any great attention to the international banks. Like good patriotic civil servants, they were concentrating on regulating the Irish banking system, because that’s the system that matters to Ireland.

The Irish Central Bank was only short of saying that the international banks could literally do whatever they want, and, only if they had a whistle-blower in their midst, would they be in any danger of being caught breaking the law, and even then, if the law breaking was intermittent and did not directly affect the Irish system, then, the most that would happen is, they would get a slap on the wrist.

The problem with this attitude is: People working in the international banking system in Ireland are governed by the Irish laws. These laws place a considerable onus on workers to inform the Irish Central Bank when their employer breaks the law. The possible consequences are fines, worldwide restrictions working in the financial industry and possibly five years in jail. When a worker tries to comply with the law, the Irish Central Bank is basically saying, “don’t tell us, ignore the law, and you will be alright” but, “if you do tell us, then you will most likely be hung out to dry”. Despite the fact that Ireland has whistle blower laws with supposedly built in protections, the reality is, the whistle blower will lose their job and will probably never work in the financial sector again. Not a good place for somebody who spent years studying to get qualifications that are rendered useless after they comply with the law.

Bigger picture stuff: The European Central bank supposedly relies on the Irish Central Bank to regulate banking companies that are based in Ireland. If the Irish Central Bank is not regulating the banking companies properly, then the companies in other countries are at a competitive disadvantage. No doubt after the meeting on Friday 20^th of October 2017, all European banking companies are examining the discussions with a view to suing the Irish government for not regulating their competitors operating in the Irish jurisdiction.

The repercussions of the historic meeting of the Irish Central Bank and Irish parliamentarians will indeed be a watershed for financial regulations in Europe.