– Naoise O Muiri says locating supervisor in Dublin would be a symbolic and practical reward for the promises Ireland has kept
– Proposal discussed with Central Bank Governor and Minister for Finance
As the final EU summit of 2012 took place in Brussels last week, Dublin Lord Mayor, Naoise Ó Múirí has re-iterated that the new Euro-area banking supervisor should be located in Dublin. The EU Heads of Government still have to work out the final details in relation to the establishment of the supervisory body.
The single supervisory mechanism (SSM) will ultimately cover approximately 6,000 banks in the euro area. The European Central Bank is expected to take on the role of supervisor but the country and city in which the new activities would take place has not been decided.
In recent weeks the Mayor has personally met the Governor of the Central Bank, Patrick Honohan and the Minister for Finance, Michael Noonan TD, to brief them on his proposal and to seek their support.
“Locating the Euro’s Bank regulator in Dublin would be a symbolic and practical reward for the promises Ireland has kept,” said Mr O Muiri. “It would gain in authority from being positioned in the capital that knows best the horrendous cost of lax financial regulation.”
The Mayor continued: “The Euro created a seventeen state common currency area but banking regulation stopped at each nation’s own borders: we have had 21st century banking with 19th century regulation.
“While the success of the new agency will depend on the powers it is granted, the wider success of the embattled common currency can and should receive a boost from where the agency is headquartered. Reality and symbolism are both important and inseparable here. Too often commentators have described the Eurozone in terms of an anchored centre and a less attached periphery. Symbolically locating the new agency in Dublin makes a bold declaration that there is no periphery to the Euro, there is one zone with one currency. Dublin is a great place to live, the easiest of cities to which to attract a multinational work force, but more than that: Dublin is at once at the heart of the European project while sharing language, a common law heritage and even strong family connections with the other great Anglophone cities of London and New York.
“The new regulatory body will not work in isolation but as regulator to one of the world’s major currencies. It will become a central pivot in global banking regulation. There is no better place to do that work than from Dublin.
“Regulators must be unpopular: popularity is a signal that they have positioned themselves to fail. The new agency can be part of, but geographically removed from the ECB in Frankfurt but also from the influence of Europe’s main baking nodes. Not alone must regulatory capture be avoided but the appearance of capture or falling in to the hands of a banking clique must be built in to the new organisation in an unmistakable manner.
“Uniquely Dublin’s main baking business is either at one remove (IFSC) or so politically toxic that there is no question of an old bankers networking party. No European city knows the costs of lax regulation so bitterly or painfully as Dublin does and positioning the agency here will mean its purpose is unquestionable from the start.
“Locating the Euro’s Bank regulator in Dublin with its would be a symbolic and practical reward for the promises Ireland has kept, the unique efforts made to return to full economic independence after the cataclysm. Despite the disaster’s consequences the country has neither flinched nor lied, meeting the targets set honestly and openly. Putting the very regulator designed to prevent such consequences befalling any other city, in Dublin, would be a marriage of poetic justice and constructive common-sense that would enhance both the agency and the currency which it is to serve.”