Alice-Mary Higgins (Independent) | Oireachtas source

I will follow up on a couple of points that were flagged earlier. One that I was a little concerned about was with regard to digital finance and cryptocurrencies. In his reply to one of the other members, Mr. Makhlouf spoke about the need to support innovation. Looking again at the mandate of the Central Bank, however, it does not have a mandate in innovation or supporting industry. The Central Bank has clear strategic responsibilities around the stability of the financial system, the protection of customers and the regulation of financial institutions. I am concerned about a narrative of having innovation in an area and then the Central Bank will see how it might need to be regulated further down the line. We know, for example, that after the last crash, lots of innovative financial products were developed, including bundled securities, subprime mortgages and so forth. Much of that innovation proved to be extraordinarily costly for the stability of the financial system and society. I am a little concerned by that. I have been concerned by the shift in tone over the last couple of years from the Central Bank in respect of this area.

I would be very concerned if it is seeking to encourage Ireland becoming a hub for this new digital finance or cryptocurrencies. The term "crypto assets" is problematic in itself because, in most cases, there are no assets. That motivation clouding the regulatory and security functions that are mandated in the legislation relating to the Central Bank is a concern.

I recently encountered an example of that in an article published inThe Irish Timeson fintech and the opportunities, as it was phrased, in that regard. It was being promoted and commercially boosted. The article in question referred to the Central Bank at length. Mr. Makhlouf mentioned that we are waiting for these EU regulations but the EU regulations have been negotiated and the final votes, which have not yet taken place, are due quite soon. The markets in crypto assets, MiCA, regulation is awaiting a vote of the European Parliament. What engagement has the Central Bank had in the development of the new EU regulations or the new proposed EU regulations? What positions has it been advocating in that regard? I make those remarks in the context of the commercially promoted article to which I referred, in which people working for business law firms in the fintech area discussed how the Central Bank has streamlined their applications recently and its new sophisticated streamlined processes. They are having meetings with the Central Bank to get it on board and understand the products.

I am concerned that on one level Mr. Makhlouf saying that this is a new area of innovation, that we are going to have to regulate it down the line and see what the EU does, that EU regulations are being actively negotiated and - prior to those new EU regulations, whether or not they are strong enough - that there is a streamlining process that seems to be taking place in the context of the Central Bank's engagement with stakeholders or commercial actors in this area. I ask Mr. Makhlouf to expand on this matter because I am extremely concerned about it.