Cutting edge legislation
The publication of the Irish Covered bond or ‘pfandbrief’ legislation - legislation to create a complex financial, cutting edge financial instrument in virtually record time by the Government this month should be a matter of great satisfaction for the financial services industry. The Department of Finance, the Attorney General’s Office, and the private sector, represented in this instance through the Irish Bankers Federation should be congratulated on a case study of successful public-private partnership of a kind that would be guaranteed to keep the ‘celtic tiger’ away from death’s door.
We report on the development on page one.and in a review elsewhere on this page. It promises to mark a major milestone in the development of the Irish financial services industry for the ‘Irish pfandbrief’ has the potential to play a significant part in the emergence of the euro bond market. This is because Ireland’s common law environment makes the Irish covered bond unique in Euroland.
This and the development of stock lending activity (see page 3) in Dublin are examples of the exciting potentials for development of Ireland as a financial centre, all the more so as recessionary clouds appear to gather internationally.
‘Creative destruction’
All the signals at this time point to continued darkening of the international economic environment. It seems likely that some time (probably months) yet has to pass before there is a bottoming out of markets and economic confidence.
The economic situation should not be a cause for alarm however; indeed, in Ireland’s case a welcome respite for investment and infrastructure to catch up with the excess demand of the past few years.
Depression, as the economic historian Joseph Schumpeter once described it, is a process of ‘creative destruction’. It represents the destruction of inappropriate, outmoded, and wasteful activities, practices, and, even organisations, and the process of re-building in their place.
Economists currently are speculating as to when the ‘recession’/’slowdown’/’bear market’ will end. The answer lies in how long it will take economic actors to (a) face up to the fact that the times of ‘irrational exuberance’ are over, and (b) that the old virtues of hard work, ingenuity, and creativity will have to reassert themselves.
Redundancy-free financial services
We are seeing the emergence of such reality already in the Irish jobs market. This month’s Finance accountancy survey clearly shows that income levels have returned in the past twelve months from to the, frankly, unsustainable rates of increase that has prevailed previously. This survey is one of the first signals to emerge in the Irish economy of a slowdown in earnings levels in private sector industry and it is from the so far relatively buoyant and redundancy-free financial services industry. In the technology sector, of course, job and salary conditions are far more depressed but this should represent an opportunity for financial services companies to consider developing their high tech expertise and payrolls in Ireland and at the same time offering jobs and careers that might offer higher degrees of stability/security than was the case in some of the ‘flakier’ dot com ventures that saw the light of day during the period of ‘irrational exuberance’.
While the healthy picture reported in this year’s survey is a source of encouragement, there should be no grounds for compacency, particularly on the important issue of regulation of the profession. Self regulation has always been a principle of the profession, and it has served it well, as it has served the legal profession well. Our managing partners’ forum in page 8 records the considered views of a number of the leaders of the industry - and the overall message emerging is that we must be very careful in implementing recommendations from the Review Group on Auditing, as over-regulation could prove stifling, and expensive, for the economy to no great avail for the public good. |
