Professor Philip Lane:

That is exactly the right area on which to focus to ask who is responsible for these funding vehicles and what are the risks involved. I emphasise that it is mostly a wholesale trade. The products are not being marketed to retail customers, to whom exposure would require a higher level of oversight. Just because something is legal does not mean that the State is offering a moral judgment on the activity. There is a considerable legal framework in place. There is an anti-money laundering framework in place, as well as a sanctions framework. The lawyers, accountants and everyone else involved in the industry have responsibilities to respect all of what is legally required in the anti-money laundering, the sanctions regime and so on. It all takes place within a legal framework. Investors in these products should have open eyes on what it is they are investing in. Largely, the cases we have seen here have been high risk investments where the pricing has recognised the risks. It is something that is located here, but it does not really interact dramatically with the Irish financial system, to which there is not an economic risk. The reputational damage questions should be placed firmly at the door of the firms that are raising finance. We are not endorsing any firm which raises money in Dublin. They must respect the legal framework in place. If they are raising money through public securities markets, we have a limited role regarding the prospectus, but it is quite a narrow function. However, it is a significant issue globally. We are to the forefront in being active participants in examining this area, at which we are looking carefully. However, it is important to separate the financial risks from the wider issues of what it means politically and the global money trail. Collectively, the world needs to do more in knowing about the global money trail. The phrase "shadow banking" is very acute. As far as I am concerned, everything should come out of the shadows; we should know what is going on. Ireland has taken a lot of steps forward in that regard. We do more than many other places, but, globally, there is a long way to go in ensuring what is in the shadows will come out of them.