asked the Minister for Finance if the EC has made any proposals in regard to the situation whereby financial services could only be provided within the EC to other member states of the EC by Japanese companies if Japan was allowing reciprocal rights to EC companies to establish similar services within Japan; if this EC proposal has any implications for the success of the proposed financial services centre in the Custom House Docks site, Dublin 1; the arrangements being made at EC level to standardise the supervisory, solvency and managerial standards in regard to financial institutions, in view of the imminence of free movement of capital and of provision of financial services; if he has satisfied himself that arrangements will exist for adequate investor and customer protection in the event of the collapse of an institution which is either based in Ireland or has investors or customers in Ireland; and the safeguards which will exist to ensure that some states do not compete to win market share by having relatively more relaxed safeguards than others.
Written Answers. - EC Financial Service Proposals.
The European Commission has proposed a procedure in the draft Second Banking Co-ordination Directive whereby firms from non-member states proposing to establish, or take-over, a subsidiary credit institution in the Community could only do so if Community credit institutions enjoyed reciprocal rights of establishment in that non-member state. This proposal is being discussed at Council. Many issues, however, remain to be resolved and the possible implications for the IFSC are being assessed. It should be noted, however, that the draft directive, even if adopted now, would not come into force until sometime between 1990 and the end of 1992.
The draft Second Banking Directive, and related draft directives on the capital and solvency ratios of credit institutions, propose harmonised minimum standards of supervision for all credit institutions in the Community. While member states may impose stricter requirements, the standards in the directives are, I believe, sufficiently high to prevent the type of competition in lowering regulatory standards referred to by the Deputy.
As regards the protection of investors, the Central Bank Bill will contain detailed provisions in relation to a scheme to protect depositors in a bank failure, and will also strengthen the powers of the Central Bank in supervising licensed banks. In addition, the Bill will extend the role of the bank generally in respect of the supervision of financial institutions not currently supervised by law. I am happy that these measures will considerably improve the position of persons investing or doing business with such financial institutions in the State.