Beginning his speech, Mr Lenihan stated:

"The changes in the Irish financial services industry over the past couple of decades have been remarkable. Compared with late 1980s, which is not long ago, the industry has increased substantially in size - both in turnover and in employment. Its range of services and products has hugely expanded and diversified. The array of skills and specialisations has broadened correspondingly. In tandem with these developments, the financial services sector in Ireland has become much more integrated into the European and global economies - in terms of both markets and ownership."

"In order to safeguard the standing of the Irish financial services industry it is essential to appreciate the needs of the industry, the concerns of its customers, and the factors shaping the industry and its development," Lenihan went on to explain, adding:

"This is vital if Government is to provide a legislative environment which best enables the financial services sector here to develop while delivering quality services to its customers in an extremely competitive market."

"Nowadays," he continued, "most of our financial services regulatory legislation comes from Brussels. Many Directives have been adopted under the Financial Service Action Plan (FSAP) over the past few years, as part of the aim to establish a single market for financial services. After the initial ‘avalanche’ of Financial Service Directives, the emphasis now is on implementation, effective enforcement and ensuring convergence in supervisory practices so as to ensure a level playing field across the EU.

"In the banking field the European Commission public consultation on possible changes to the Capital Requirements Directive (CRD) concluded on 16 June. This Directive requires banks and investment firms to hold reserve capital in proportion to the risk of financial losses from whatever activities they engage in. The Commission is considering changes in a number of areas, to ensure that the CRD is an effective and relevant measure.

"Ireland is involved in informal discussions on the Commission’s plans at the European Banking Committee and a formal proposal is scheduled to be adopted by the Commission in September 2008.

"Ireland is widely regarded as an experienced and established centre of excellence for the administration of funds. There are now more than 7,000 funds with a value in excess of EUR1.5 trillion established here. I might also mention that despite the market turmoil of the past year, Irish domiciled funds still managed a 10% growth rate during 2007," he explained, moving on to add:

"In the near future the European Commission is expected to issue its proposals for major reforms in the area of UCITS or EU harmonised retail funds. Ireland has actively participated in discussions on the shape of those reforms. It is essential that we ensure that the new regime does not introduce any regulatory uncertainty which could undermine the continuing success of the UCITS brand, both within the EU and further afield.

"There is the possibility of another initiative coming from Brussels in the area of open ended real estate funds. Ireland supports the Commission’s efforts to tackle this area and agrees with those who believe that a new regime could be modelled on the existing UCITS arrangements, but should be provided for in separate EU legislation.

"Over the last year we have all observed the disturbances in financial markets internationally. The international financial landscape has altered: the decline in the value of assets backed by US subprime mortgages and concerns about international banks’ exposures to these assets has led to difficulties in the wholesale funding markets; and a number of large international banks have announced significant writedowns and rights issues. Though originating in markets far from our shores and products to which Irish banks had little or no exposure, these events have inevitably had impacts here, reflecting the strong international orientation of Ireland’s financial services industry.

"One significant initiative arising from the October 2007 Ecofin Roadmap that has just recently been implemented is the signing by all Member States of a Memorandum of Understanding (MoU) on co-operation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on cross-border financial stability. The MoU sets out practical arrangements aimed at strengthening co-operation between authorities throughout Europe for the maintenance of financial stability."

Concluding his speech, Mr Lenihan stated:

"Maintaining the competitiveness and reputation of Ireland as a centre of excellence in financial services is central to our regulatory policy. The importance of operating from a jurisdiction of good reputation is critical for those firms who conduct business from Ireland with international clients and counterparties.

"We have come a long way since the 1980s. We have grown strongly, even through periods of global political and commercial uncertainty. We have demonstrated our capacity to address fundamental economic problems through strong governance, innovation and partnership. This approach is exemplified in the growth of the financial services sector. I am confident that this approach will ensure the continued success of this vital component of our economy and the economy as a whole."