Dr. Jim Stewart:

A cost-benefit analysis of section 110 or of any other areas is dependent on the assumptions made, including issues such as employment. If firms locate in the IFSC because of an array of products that are used here including section 110 financing, for example, will it affect their decision to locate here? Given that they employ very few people and that there are many other ways of financing a firm, maybe some activities would move to other financial sectors but I do not see any inherent problem if section 110 companies close down. We need to remember that most of the employment provided through section 110 firms must be indirect. It is law firms, corporate services agencies and accounting firms providing services to these companies. I do not believe any single law firm or accounting firm is dependent solely on auditing section 110 accounts. It must be a fraction of such firms' income. Some corporate services firms may be more dependent but the vast majority are dealing with companies other than section 110 companies.

The number of companies in Ireland which have no assets or employees, shell companies, is vastly larger than section 110 firms. The Central Bank defines shadow banking as being equivalent to section 110. This is not true. Special purpose vehicles exist for all sorts of different reasons, such as holding assets, patents etc. They may be used for various financing purposes. It is likely that there are many thousands of shell companies in Ireland given that definition of no fixed assets and no employees. However, they may be doing useful commercial tasks, particularly holding assets or patents, or buying and selling property. These sorts of activities tend to shade into the shadow banking sector. To equate shadow banking with section 110 is rather misleading. The shadow banking sector is much larger than that and is quite pervasive in many different areas of the economy.