Mr. Oliver Gilvarry:

There is a financial stability aspect as well. Even if this industry was not here, we must consider what the money market fund industry is investing in. It is investing in securities issued by entities. On the whole, those entities are financial institutions. On the points Deputy Pearse Doherty made in relation to the pressure on money markets in 2007 and 2008, and the pressures on the banking system because of runs on money market funds, we saw that affecting the system overall. Even if these funds were not here, we would have to look at the financial stability concerns for any institution based in this jurisdiction outside the money market funds - let us say, on the banking side.

The other matter we have to factor in is the point Deputy Pearse Doherty made on the French market. The French market, 99% of which is a variable net asset value market, has suffered significant runs as well, in 2007 and into 2008, and there have been a number of academic papers on that. The Boston federal reserve and also the Bank of Canada have highlighted that, and so has the Central Bank of Sweden, Sveriges Riksbank.

The issue we face here with the 3% buffer, and whether we support it, is that this sector is internationally focused and, unless there is international co-ordination, it moves offshore. Our issue with regard to the links to and concerns for the banking system is that those securities will still be issued by the European banking system and our own banks and money market funds outside this jurisdiction will be able to purchase them, so there is still a risk in relation to pressure on money market fund instruments and the banking system. If we impose a buffer, that basically means the industry will move offshore. That is why it is so important that we see international co-ordination between the two main jurisdictions, Europe and the United States, where these funds are based. The point is that the buffer is very much for constant net asset values, but we saw runs in variable net asset values as well, which were equally damaging to confidence within the banking system and the financial market system.