McCreevy says Ireland safer in euro

BANKING REGULATION:EU INTERNAL market commissioner Charlie McCreevy says he fears what might have happened had Ireland not been part of the euro zone during the current economic crisis.

Speaking to The Irish Timesat Davos, Mr McCreevy said that Ireland was "a lot safer being inside the euro zone".

“The fact that we are members of the euro has been of assistance to us for the last year or so,” he said.

“I dread to think what might have occurred if the punt was still in existence and we were not part of the euro zone – or to anticipate what would have occurred.”

Stricter rules governing European banks would not solve the economic crisis, Mr McCreevy warned, responding to criticism that poor supervision of the European banking sector caused the crisis.

“Those who think that regulation is going to solve this will be horribly disappointed: it won’t, on its own,” he said. “If there are identifiable areas where there are calls for additional regulation, we in the European Union have adopted new measures and will make further changes as necessary.”

The EU is moving to close what Mr McCreevy has described as gaps in the rules on banks and credit rating agencies, following almost $1.1 trillion (€849 billion) of losses by banks over the past 18 months. He said time was running out for banks to agree to a European clearing system for credit-default swaps, a type of insurance derivative on stocks, to protect markets, or they would risk the imposition of new EU rules. “We’ll go that route if we can’t, in the next week or so, make some agreement with the industry.”

Mr McCreevy said he did not believe Europe-wide banking supervision was needed, though banks operating across several EU countries did need to be monitored more effectively.

Mr McCreevy added that more than half of all EU states opposed proposed legislation reforming regulation of the banks, and that the issue was “very vexed”.

Asked whether he could have introduced more changes to take the heat out of the Irish economic boom during his time as minister for finance, he said: “I don’t think it is at all possible to look upon things like that. We grew at a pretty substantial rate. We had a lot of factors in our favour at that time – a big and well-educated workforce, and then we attracted a lot of people into the country.

“All those factors did the economy well. You must remember the Irish economy today, despite the downturn, is not the Irish economy that was there 15 years ago.”

Mr McCreevy ruled out a return to national politics in Ireland when his term ends in November.

“I made it quite clear when I came to Europe that this would be my last political posting. I have been there, done that and had a great run at it,” he said.