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Changes in Europe to challenge €2 trillion Irish funds industry

CHANGES in Europe pose challenges to the €2 trillion Irish funds industry, Taoiseach Enda Kenny said this morning.

The Government is acutely aware that regulatory developments in Europe pose both opportunities and challengesfor the industry,” MR Kenny told a conference on the fund industry.

“The Government will continue to work closely with allstakeholders to ensure the best representation for Ireland in Europeann egotiations,” he added.

Financial regulator Matthew Elderfield told the same conference that Europe should drive reform of money market funds to lower the risk in the so-called shadow banking sector.

Investor runs on this sector during the international financial crisis “led to a disruption in the flow of finance to the real economy and necessitated dramati interventions by public financial authorities,” Mr Elderfield added.

While Elderfield said his preference is for an “international alignment” between Europe and the US, the US Securities and Exchange Commission may “not be driving further regulatory reform in the short term.”

Money-market mutual funds, which hold short-term debt and are used by clients for liquidity, are part of the so-called shadow banking system, that provide cash globally.