Moving regulation of the financial sector away from the Central Bank to a new, independent single regulator was a serious move which would need to be carefully considered, the president of the Irish Bankers Federation has said.

Mr Kevin Kelly, also managing director of AIB, said there was a lot of emotion around the issue but the Central Bank had a good track record. "Internationally, it's very well respected," he said.

Financial institutions and trade associations have lobbied to retain a regulatory role for the Central Bank but the Tanaiste, Ms Harney, backs the recommendation of the Government-appointed commission to appoint a new regulator.

Meanwhile, the Minister of Finance, Mr McCreevy, has confirmed the Government's decision to create a single financial regulator with responsibility for both consumer protection and prudential supervision of financial institutions. He said it had yet to be decided if it would be under the auspices of the Central Bank or a separate, independent agency.