Professor Philip Lane:

I would be more optimistic in that I do not believe there is anything inevitable about the policy framework. There was a regulatory choice. It is important to say that there are these kinds of global factors, but policies still make a great deal of difference. You can see that some countries around the world have mechanisms which did protect their banking systems. There is nothing inevitable about the regulator getting caught up in it. In the Irish case, it is very important to distinguish between the regulation of the local banking system versus the regulation of the IFSC. If you like, the regulation of the IFSC is also part of a global issue relating to international finance versus national systems. Essentially, there is a lot of global effort along the lines of: "How can I structure my global portfolio to avoid regulatory intrusion? I will set up a contract which runs through the Cayman Islands, which lands in Ireland for a bit, which goes on to Switzerland and so on". We know the world needs to deal with offshore finance and Ireland is part of the debate with regard to what is the role of offshore centres of different types in the global system.

On the last question of who are the net losers and winners from this, it would be an important project to generate a full answer. Part of it was waste. We do have a great deal of wasted capital in the context of all of the effort to build houses where no one wanted them and so on. Part of it is that the money just went down the drain in terms of waste. We pay for things which are useless. Let me go back to the issue of who was involved in 2007 and where are they now. Of course, the way the system was, a lot of these debt contracts were paid off. Essentially, we replaced the banking liabilities with sovereign liabilities through recapitalising Anglo and so on. The question, of course, is whether we could have managed an alternative way to resolve that or whether we could have managed to place more of the losses on foreign investors. This inquiry will address that matter with different layers of analysis in the coming months. I think that, yes, more could have been put onto foreign investors in different ways but it is equally not so clear that there is any easy answer. I hope this inquiry can reveal what were plausible alternative possibilities.