Professor Patrick Honohan:

I do not altogether believe it. If the IFSC had not been there, if for example it had been outlawed by EU rules or something else, I think we would still have had the problem with our domestic banks, which is what we are really talking about here. I think the international regulatory environment, which moved very much in the direction of laxity during the 2000s, certainly spilled over into attitudes here as well. People thought they were behaving like the general trend. There was definitely a move towards lighter regulation globally from the mid-1980s on and that certainly influenced the environment.

However, whether the channel was through the IFSC, I would not see it like that. I do not dispute the fact that regulation was a relevant factor and that encouraging an open door policy was relevant for influencing regulations that affected the IFSC, but it was not as if the regulations were brought in to ease the way of IFSC banks and were seized on by local banks. I do not think that was the mechanism, if that is what is implied by the discussion here.