GERMANY’S highest-ranking court could seriously destabilise financial markets if it does not support closer fiscal integration in the euro zone, the new IFSC representative, John Bruton, has said.
In his first speech as chairman designate of IFSC Ireland, a new body set up to promote Ireland’s financial services sector, Mr Bruton said it would not be wise to wait for the views of Germany’s constitutional court to protect the stability of the euro zone.
Other measures to improve EU democracy allowing closer integration, such as the direct election of the president of the European Commission, should be considered, the former taoiseach told the annual lunch of the Federation of International Banks in Ireland.
The court’s views could be damaging for the stability of the euro zone and “might take the financial markets by surprise”.
The court – which has set the parameters for Germany’s relationship with the EU over 17 years – could object to the increased level of EU surveillance of the German budget and Germany’s large contribution to the €750 billion euro zone bailout fund.
Mr Bruton, a former EU ambassador to the US, said the EU should consider ways to improve democracy to safeguard the euro in a form acceptable to the German court.
Directly electing a commission president would “create a similar level of democracy at European level to that we each enjoy at national level”, said Mr Bruton.
“The present crisis is an opportunity not only to deal with long hidden fiscal problems but to make the European Union even more democratic.”
He said wholesale financial intermediation accounts for about 7 per cent of Ireland’s GDP, compared with an EU average of 2 per cent, while Ireland had 10 per cent of all EU funds under management but just 1.4 per cent of the EU-wide GDP. It was critical for Ireland to have a reputation as a “thorough, rigorous and pragmatic regulator of the industry”.
“Nothing is to be gained either by laxity or rigid formalism. It is all about winning and holding trust, in that there is no divergence from the interests of the regulator and regulated.”
