Stephen Donnelly (Wicklow, Independent)

I think it is fair to say there is agreement across the House that there is no moral or legal obligation on us to pay the bond due to be paid today by the Irish Bank Resolution Corporation Limited, formerly Anglo Irish Bank Corporation Limited. I agree with the Minister's own assessment from last year that it is a disaster and obscene thing for us to be doing. Taking that for granted, I would just like to understand why we are doing it. In his own speech last December, he dismissed the contagion argument, and I agree with that assessment. He pointed out that paying the bonds worsens our reputation, as has been borne out since, because we are now graded as lower than junk status. I also agree with that. This only leaves one argument, which is this assertion that the ECB believes that not paying this money back to the speculators would collapse the European banking system in some way. The IMF does not agree with that.

My understanding of the argument is that the ECB is forcing us to pay these speculators and if we do not, it has one of two options available which it will invoke. The first is that it will increase the interest rate for the emergency liquidity assistance and the second is that it can remove that emergency liquidity assistance. Doing either of those things would destabilise the Irish banking system and would cause exactly what the ECB claims it is trying to avoid.

Within that context, I would appreciate the Minister's position on the following two questions. Why does he think the ECB is credible if carrying out that threat on behalf of the ECB will cause what it is trying to avoid? Has the Government done a risk analysis of the cost of the ECB pulling either of these triggers relative to the costs of paying the bondholders?

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