Professor Patrick Honohan:

Deputy Boyd Barrett is referring to investment funds, private equity funds, hedge funds and so on. There is a lot of things to complain about in respect of some of the behaviour of certain funds, but they have become an ingredient of the financial system which is increasingly important. That is for various reasons, but one of the reasons is the considerable regulation of banks. Squeeze that part of the balloon and something else emerges. Many of the funds are serious intermediaries which are providing facilities to pension funds. Where are we going to invest our pension money? Let us go to this investment fund, because it knows about how to do these things. These types of funds are doing it on a scale of billions. They can economise. They are buying Government securities and equities in reputable companies and so on and so forth. A vast bulk of that business is reputable, well run and, if one looked under the bonnet and kicked around it, one would think it is actually all right. There are then some more aggressive funds with which one might not wish to do business. Some of them are regulated. Some entities are not regulated. We would want to be very dubious about those ones.