Brian Cowen (Laois-Offaly, Fianna Fail)

I welcome the support the Deputy indicated for the developments over the weekend, which were necessary. A situation had arisen which, as far as the European Central Bank was concerned acting independently, was of such a nature that decisions were taken both on Friday evening and Sunday night that have had the impact required in terms of confirming that there is a full, united, comprehensive approach by members of the euro area to defend the currency in every circumstance. Based on the initial response, that has been understood by the markets. One must remain vigilant. We cannot determine the outcome of such matters in the space of 24 hours but the initial response has had the intended effect.

Some of the questions asked by Deputy Gilmore will be a matter for discussion within the taskforce headed by Mr. Van Rompuy. I refer to economic governance issues in general, how the Stability and Growth Pact works, what improvements need to be brought about and whether there are areas in which one could introduce measures that would be regarded as preventive rather than corrective. A warning system is currently in place for excessive deficit procedures. The sanction is usually in the form of a fine. Debate is ongoing on whether there should be a greater degree of surveillance or monitoring. All of those issues must be discussed.

As yet, no decision has been taken but there has been an indication of the need for the Van Rompuy taskforce to accelerate its work. It was envisaged that the work would proceed until the end of this year prior to recommendations emerging but it may well be that they would emerge sooner than that. As part of the urgency of the need to deal with those matters that relate to the structural issues that arise in the European economy and how the stability of the currency is viewed in that respect, not just from a monetary point of view but a fiscal and competitiveness point of view, a Commission proposal this week will input into that process. The first meeting of the taskforce will take place in the following week, on 21 May. We are seeing a ramping up of the ideas that will be brought forward for discussion and ultimate agreement within the taskforce, which will then come back to ECOFIN and the European Council in due course.

No one wants to see the euro in this position again. That involves first demonstrating that community instruments are in place to support the euro or countries. The only country that has sought support is Greece. A contingency arrangement has been put in place and a special purpose vehicle has been set up by euro area member states to allow for the purchase of bonds in the market which would be guaranteed by the states proportionately. This country has signed up to that commitment. We must show solidarity for the stability of the currency.

Deputy Gilmore raised the future regulation of hedge funds. It has always been our view that we must ensure we are competitive in the context of the provision of financial services. They provide a significant number of well-remunerated jobs. The IFSC has weathered the financial storm relatively well, perhaps better than expected. Potential has been identified in the funds administration area for future job creation in this country. It is clear that one must balance that perspective with the need for adequate regulation. We need to consider our position in that respect.

My view and the view of the Minister for Finance and the Government is that there was a mistaken view in terms of governance of such instruments in the past. That is why we ended up in the current position. It is clear that we must devise an improved surveillance and monitoring mechanism and a regulatory system in all respects, not just in terms of financial institutions but some financial instruments as well. Our general disposition is that we are open to joining a consensus that would see Europe providing for an improved regulatory regime in all of those areas. We should also be mindful of the fact that this is a global industry and it is important that we are competitive in the industry as well in terms of retaining jobs. Significant Exchequer resources accrue to this country annually as a result of having a profitable financial services industry. The IFSC has had that benefit for us both in terms of employment and revenue. Based on the fact that this area is a work in progress and that no decision is imminent, although the ongoing work is urgent, that is the best response I can give.

See this speech in context