Ireland's EU Commissioner Charlie McCreevy said any attempt to regulate risk in the financial sector "out of the system" would ultimately lead to the collapse of capitalism.
Speaking at the World Economic Forum in the Swiss alpine resort of Davos, Mr McCreevy told The Irish Times that there was a need for a "measured response" to the global financial crisis. He said there had to be "an appropriate balance of regulation" to keep risks in check but also to encourage innovation and economic growth.
"There is no point dreaming that you can regulate risk out of the system. If we ever get to a system worldwide where you regulate risk totally out of the system, that will be the end of capitalism."
Mr McCreevy said that although new types of financial products sold around the globe have caused the crisis, they have also generated considerable economic wealth.
"Innovative financial engineering and the spreading of risk has undoubtedly been a factor in the high economic growth over the last decade.
"That is an absolute given but what has also been a factor is that in the pursuit of higher and higher returns, individuals and corporations have not been taking pricing risks at the appropriate level."
Mr McCreevy was one of a handful of Irish participants at the five-day economic and political summit.
Former Ireland president Mary Robinson, now chairwoman of the New York-based lobby group Realising Rights: The Ethical Globalisation Initiative, attended Davos for mostly private meetings to discuss anti-poverty and development issues.
She expressed concern that the economic uncertainty may force some developed countries to shelve commitments made under the UN millennium development goals to fight hunger and poverty.
"It's much easier to meet these targets when countries are in a growth curve. I do fear that it will foster a mood of nationalism and isolationism that is already there."
Archbishop of Dublin Dr Diarmuid Martin travelled to Davos last Friday for talks on kickstarting greater dialogue between western and Islamic groups.
The World Economic Forum launched a report on the eve of the Davos summit which showed that a majority of people in 21 Muslim and non-Muslim countries believe that violent conflict between the West and Islam can be avoided but are pessimistic about relations between them.
Dr Martin, who contributed to the report, said that a strong economic climate encourages people to engage in dialogue. He said economic stability depends on "many more elements than pure economics - it needs social cohesion, good governance and a high level of education".
"This is the challenge to economics as a science. You will not have social progress without sustained economic growth but sustainable economic growth requires social stability."
