Speech by Minister Donohoe to the European Financial Forum

13th February 2019

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Good evening ladies and gentlemen.

I am delighted to join you here this evening at the 4th European Financial Forum.

It has been a very interesting and insightful day here at Dublin Castle.

We have had the opportunity to hear from the key decision makers in the International Financial Services sector at a critical time of change in the international political and economic environment.

The theme for the Forum this year is “Policies and Business Models for a changing financial landscape”.

It may be somewhat of a truism to say that unless you can change to meet the ongoing challenges and opportunities of our modern dynamic world, there is a danger of standing still and eventual decline.

I think that this is certainly the case for international financial services and the issues which pre-occupy all of us present this evening.

This element of dynamism and the need to be able to meet todays and indeed tomorrow’s challenges and opportunities was fully captured by today’s speakers.

Your deliberations have certainly had an impact outside of the conference hall. The lead story on RTE, the state broadcaster, for much of the morning came from the EFF.

Governor Philip Lane’s scene setting presentation was taken up by the station, in particular his analysis of a No-Deal Brexit.

However, Brexit was not the only discussion point, even if it did naturally come up frequently.

Steven Maijoor of the European Securities and Markets Authority said it is about challenges of regulatory divergence and arbitrage as the EU moves beyond Brexit, and this is where the focus of their work lies. In essence, it is about beyond Brexit.

Another example, and I can unfortunately only pick out some examples, is the insightful and thought provoking framework for disruption that Ronald O’ Hanley from State Street provided. His five great disruptors since the great financial crash set challenges we will need to look at, and think about carefully, whether we are in business, regulation, or like me as a Minister in policy making.

Finally, the importance of leaders and senior decision makers, like Raphael Bostic, coming to Dublin to hear first-hand where exactly the European Financial System is at, and vice versa. We have heard today of the areas where Europe is showing a lead to the US, such as in payments, and areas where the US can provide a template for Europe with financial market infrastructure.

I hope to be able to build upon some of these themes during my remarks with you this evening.

Firstly, I would like to thank all of our speakers and our audience for attending the Forum here today. I know that many of you have travelled long distances and re-arranged schedules to be here. Your efforts are very much appreciated.

I hope that you have had a productive few days in Dublin and will get some time this evening and tomorrow to enjoy this great city and our beautiful country.

I also hope that you will pencil next year’s Forum into your diaries which will take place on the 12th of February 2020.

Today’s Forum has been the most successful to date with the largest attendance and the greatest number of speakers. I’m confident that next year will build further on this success.

It is a great honour to share the stage with Secretary Lau and I would like to welcome him to Ireland and to the EFF here in historic Dublin Castle.

Ireland and Hong Kong both have very open economies successfully trading on the global stage and we are both leading international financial services centres.

We do not however, rest on our achievements and successes.

Instead, we continually innovate to provide the very best financial services ecosystem and we must continue to do so to face into the challenges ahead.

One such challenge for Ireland is the key date of 29th March when the UK is due to leave the European Union.

Ireland wants the closest possible relationship between the EU and the UK, in order to minimise the impact on our economy and trading relations.

At the same time, it is vital to our economic interests that the EU’s Single Market is fully protected.

A No Deal Brexit is the worst possible outcome for the UK, Ireland and the EU.

That is why our focus remains on securing the deal that has been reached.

Brexit will have negative consequences in all scenarios, but our key protection from whatever Brexit brings will be our status as a Member of the European Union, with all the stability and solidarity that brings.

We welcome and share the UK Parliament’s ambition to avoid a No Deal scenario.

However, we will continue our preparations for all outcomes.

While we do not want this to happen, we are doing all we can to be prepared both at home and in co-operation with our EU partners.

To that end, I want to especially highlight the decision of the European Commission in December to grant equivalence to the United Kingdom with regard to Central Securities Depositories.

This time limited equivalence decision has provided welcome clarity for the Irish equity and ETF market and provides a 2-year period to transfer settlement to Euroclear Bank Belgium.

Euronext Dublin, Euroclear, the Irish market and State authorities are all working closely together to ensure this transfer occurs in a timely fashion with minimal disruption to the Irish market.

For this complex project, the one certainty we have is the two-year timeline from the end of March, and all parties must work to complete the transfer within this period of time.

We must all accept that Brexit is a disruptive event which has negative impacts on business models and ways of operating. This requires us all to accept certain changes and to accept previous long standing certainties are no longer available.

While Brexit poses challenges, there are also sectoral opportunities particularly in the international financial services sector which is heavily reliant on the need for access to the Single Market and ongoing compliance with EU regulatory standards.

Brexit has already seen opportunities for Ireland to increase its share of financial services based investment.

Public announcements to establish or expand operations have been made by many companies who are present here today.

These include announcements by Bank of America Merrill Lynch, JP Morgan, Citigroup, Barclays, Bank of China, Legal & General, S&P Global, Kroll and Coinbase, to name a few.

Our proximity to, and similarities with our closest neighbour, will ensure that Ireland’s offering as a specialist financial services centre will continue to complement London’s offering as one of the most important financial centres in the world.

We will build upon our close ties to London, while also becoming an increasingly important bridge between the EU and the rest of the world for financial services.

In the wake of the Brexit referendum result in 2016, the Government has continued to implement the IFS2020 strategy for driving growth in the international financial services sector and we will continue to leverage this strategy to maximise those opportunities.

This Strategy has been in place long before the UK decision to leave the EU and provides a clear roadmap to develop the sector.

My colleague Minister for Financial Services & Insurance, Michael D’Arcy spoke to you earlier about our continued efforts to support, sustain and indeed grow this sector through our new Strategy for IFS into the next decade which will be launched in the coming months.

Ireland, as an English-speaking, common law jurisdiction with guaranteed access to financial services regulatory passporting across the EU, can offer an effective and efficient solution for those companies considering their Brexit strategy.

We will continue to promote the attractiveness of Ireland as a location of choice for mobile international investment and for talented people.

Ireland’s new five-year Strategy for financial services will build on our existing success, but it also looks to the future – a sustainable and inclusive future.

For us, key areas for action include Sustainable Finance and Fintech.

While the Strategy builds on our existing expertise and success in these areas, we want to do more.

One of the major challenges facing Ireland and our global partners today is climate change.

Sustainable finance is a key area that Ireland has identified to help us develop the financial services sector while also ensuring we are fully equipped to tackle future climate challenges in the present.

Last October’s UN’s Intergovernmental Panel on Climate Change Report was a stark reminder of the grave challenges facing us now and into the future.

With no single solution to addressing the challenge of climate change, collaborative efforts will require leadership and action from a multitude of actors from multilateral organisations and Governments, to businesses and individuals.

In Europe alone, an annual €180 billion of additional investment is required to achieve our 2030 climate and energy targets.

Ireland, like all other countries, has an important part to play in meeting these challenges and we already have taken a number of significant steps.

Last October, Ireland became the 4th EU country to issue a Sovereign Green Bond. For 12 years and amounting to €3bn, it attracted very strong market interest and it was over-subscribed on a 4:1 basis.

The Green Bond is a strong signal of our commitment towards transitioning towards a low-carbon economy.

It will also help reduce the cost of capital for green projects by attracting new investors and mobilising private capital towards sustainable development.

I am pleased that International Financial Institutions have attended this Forum where they met investors and investment firms working in sustainable finance and climate finance.

Helping to build linkages between investors and investment needs ensures that sustainable finance becomes deeply and successfully embedded into the financial services ecosystem.

The Green Bond and the work by our Sovereign Wealth Fund are underpinned by the Government’s National Development Plan which will invest €22bn in green infrastructure by 2027 to help meet our national decarbonisation targets.

Out of total funding of €50bn, this represents a very significant investment.

It also includes a €500m Climate Innovation Fund established to identify and develop innovative businesses and initiatives in the areas of Climate Action and sustainable finance.

Last October, Ireland and Hong Kong signed a Memorandum of Understanding between Sustainable Nation Ireland and the Hong Kong Green Finance Association.

This is a tangible demonstration of the global interest in sustainable finance and, in particular, the interest in Ireland and Hong Kong.

It signifies the close ties between these leading financial services centres and a commitment to further develop this important area for our future and the future of the next generations.

From the beginning of the Government’s current Strategy for financial services (IFS2020) in 2015, we recognised the increasing opportunities for Fintech with Ireland’s long and successful track record in both the technology and financial services sectors making Ireland the perfect location for Fintech firms.

In very basic terms, you cannot have Fintech without both financial services and technology.

In Ireland, we have both.

This is not the result of luck or chance – it reflects the outcome of a strong commitment and investment into both areas over a long period.

It also reflects an ongoing investment in education and skills, the essential building blocks for Fintech and the innovation which drives it.

While we have come a long way in respect of financial services and Fintech, it is not just taking place in Dublin.

Payments and Fintech in particular are thriving in Ireland’s regional towns and cities providing a competitive and seamless service to clients worldwide.

We have seen a number of significant investments in Fintech in Ireland in recent years. Established players such as Mastercard, Citi, and Fidelity have launched innovation labs in Ireland.

We have also embraced a new wave of innovative Fintech firms with operations in Ireland. The likes of Stripe, Kabbage and Yapstone are examples of this new era of firms who are locating operations in Ireland.

The strength of Ireland’s knowledge economy is continuing to drive employment in blockchain-related jobs with global companies such as MasterCard, IBM, Deloitte and Consensys and Coinbase all choosing Ireland as a destination of choice to expand their European blockchain operations.

The world’s top 10 global software companies have chosen Ireland as a centre of excellence, alongside all of the top 10 ‘Born-on-the-Internet’ companies.

Given the way that Fintech is developing, especially in Ireland as a world leader, it is both sustainable and inclusive.

This is why I will be putting Sustainable Finance and Fintech as the central pillars of the Government’s new financial services Strategy.

They will be the growth engines for the future for Ireland but on a global basis.

Successful creation of a sustainable and inclusive future in regard to financial services is a challenge, but it is also a wonderful opportunity.

If developed properly, it can create significant benefits in the present but also well into the future.

For us, it will bring benefits to Ireland but also to other countries. Together, sustainable finance and Fintech provide a perfect match linked to the Forum’s key theme.

They enable the identification and development of policies and business models for a changing financial landscape.

A landscape with significant promise for those who dare to dream and shape the future.

Ends