Mr. Simon McKeever:

I have not been working with currencies for a number of years. The question of whether we should have a floating currency linked to sterling has come out of left field. I will answer in a slightly different way from that which might be expected. The extreme volatility we are currently seeing in the currency market is likely to continue. Right now, much of the bad news we have heard is probably priced into it but we do not know what will happen in the next few months. I am not sure whether I advocate a floating punt because, as a country, we have very small reserves by comparison with the European Central Bank. In answering, I am thinking completely left field also. We could find ourselves in circumstances in which the punt could become extremely devalued if the economy were to come under attack. From an exporter's point of view, it might be a good idea. From an importer's point of view, it would not be good.

Could I expand a little on the currency piece? I mentioned that we came up with a national hedging strategy. I had seen something like it done in another country approximately 20 years ago. The export credit insurance risk of the country, as a national phenomenon, was managed by a particular entity using synthetic options. One could have a vehicle in the NTMA, perhaps, that knows how to manage the risk. Rather than pouring €200 million, €300 million, €400 million or €500 million into an enterprise development fund, could it be poured in to manage a set of options such as those I describe? Somebody needs to pick up the telephone because there has to be a different approach with Brussels at present if there is to be a breach of state-aid rules. It is possible that a hedging strategy could be put in place at national level and that a reduced or subsidised rate could be given, particularly to smaller businesses.

On hedging, we have all mentioned different kinds of statistics. Our figure for what is on hedge is approximately 50% but we have range of companies in it, from small to very large. It is done in a very peculiar way in this country in that a company, unless it is very sophisticated, is relying on its bank. When I worked in the banks, foreign exchange procedures were such that when amounts of sterling came into one's hold account, the trader rang and said it was in and asked whether one wanted to trade on that day. One checked the rate and if it was not favourable, one decided to wait and wait and wait. The professionalism associated with understanding currency risk does not exist in smaller businesses, so we need to have an action plan on that. In small businesses, the trusted adviser is the accountant. Smaller accountants, in particular, do not understand that the management of the risk needs to be built strategically into one's business management. Therefore, it is not about the rate of next week or month. We are all talking about the first quarter next year. It is a question of determining the risk associated with the currency being valued at X, Y or Z next March, April or May and what one should do about it. Unfortunately, the organisations that know about this stuff, namely, the banks, do not command trust. I have stood up publicly in a chartered accountant's house and asked whether they could develop a continuous professional development programme to help smaller accountants and businesses to understand the exchange rate movement. I am sorry I did not answer the question.