US investment bank Morgan Stanley has shifted more than €1 billion in investors' assets from Luxembourg to Dublin, it revealed yesterday.

Morgan Stanley Investment Management, the bank's fund management arm, said last night that the city's quicker and more efficient settlement system for entering and exiting funds sparked its move to the Irish capital.

The bank has moved €1 billion in sterling, dollars and euros in money market assets to Dublin. It manages this cash on behalf of other institutions.

The money is invested in short-term credit instruments denominated in each of the three currencies. Institutions who want to deposit funds in low-risk, short-term products that allow them to enter and exit quickly favour these products.

Morgan Stanley said last night that the main attraction of Dublin was that it allowed "same-day settlement". This means the money can be invested in the fund on the same day as the investor deposits it with the bank, or it can be withdrawn on the same day the investor requests this.

In contrast, Luxembourg's regulations do not allow this, and it levies 0.01 per cent tax on funds under management, while Dublin does not.

Morgan Stanley Investment Management business development manager, Mr Nick Hoare, explained that clients for these funds prefer speedy settlement.

"Retail funds move in and out of money market funds more," he said. "You can get in and get out of the funds quicker and in an easier way in Dublin."

The €1 billion accounts for about half of all market assets that Morgan Stanley holds in Europe. It manages the cash that is remaining in Luxembourg for retail customers.

IDA Ireland, which has identified financial services as a source of future job creation, last night welcomed Morgan Stanley's move.

Mr Brendan Logue, head of its financial services division, said it reflected the Republic's growing importance in global financial markets.