Mr. Aidan Carrigan:

I thank the Deputy for the question which shows a good understanding of the issues and debate under way. In case there is any misunderstanding, I clarify that we are not proposing soft regulation of money market funds. We are fully behind enhanced regulation and the securing of the sector. Our aim is to secure the sector and regulate it in a way which does not strangle it and lose the industry to elsewhere in Europe, which is a real concern. The question is whether money market funds have equivalent pay buffers to those for the banks. I outlined in my opening statement the range of additional enhanced regulation procedures which had been introduced which might not apply to banks and I place the matter in that context. There is a limitation on what these money market funds can do with the funds. Money market funds can only have 10% of the portfolio of assets mature within one day and they must have another 20% maturing within one week. They can only invest in money market instruments, deposit with credit insitutions, financial derivative instruments and repos. They will not be permitted to invest more than 5% of their assets in market instruments issued by a particular body. There must be a dispersion. There are various other matters, all of which are aimed at reducing the risks associated with the funds. These are minimal risk funds which are very restricted in the way they can be operated. Therefore, we are not comparing like with like when comparing these funds to banks. The 3% buffer proposed does not compare, therefore, with a similar buffer in banking where the actual capital buffers are calculated based on risk-rated assets. If the buffer was calculated based on risk-rated assets in this context, it would meet many of our concerns. The risks are very low with these funds compared to the risks taken by banks.

The funds are for professional investors only. These are investors who know the risks they are taking and are managing their funds. Much of the capital requirement for the banks is designed to protect ordinary consumer investors. Mr. Gilvarry might discuss the differentiation in approach to the calculation of funds.