Dáil Éireann debate -
Wednesday, 6 Oct 1993

Vol. 434 No. 2

Written Answers. - Reintroduction of Exchange Controls.

Noel Ahern

Question:

132 Mr. N. Ahern asked the Minister for Finance if he will reintroduce exchange controls at an early date, in view of the fact that they were originally removed to satisfy our commitments to the Exchange Rate Mechanism which are no longer binding.

Minister for Finance (Mr. B. Ahern)

The abolition of exchange controls by EC member states, including Ireland, in order to allow free movement of capital was related to the desire for a fully-functioning internal market in capital and investment and was not part of our obligations to the Exchange Rate Mechanism (ERM). The ERM still exists and Ireland is still a member of it.

I have seen the comments by the President of the European Commission to which Deputy Hogan refers. I would point out that President Delors did not call directly for partial reintroduction of controls on the movement of capital, but rather said that he did not see why methods of limiting movements of capital should not be studied at international level or why there should not be some "rules of the game"; he gave as an example of a possible rule, a requirement for minimum amounts of cover in respect of movements of capital.

The basic point being made by President Delors was that the balance of power between the markets and Central Banks has changed significantly in favour of the markets over recent years. It may be that some form of regulation might be of value to somewhat redress this balance, but any such action would need very careful study and would need to be decided upon, and applied, on a wide international basis if it were to be fully effective.

I have no plans to reintroduce exchange controls, which Ireland abolished on a phased basis over the period 1988 to 1992, and I would point out that Article 73 of the Treaty on European Union will in any event prohibit their use with effect from 1 January 1994 except in very exceptional circumstances.