Michael Colreavy (Sligo-North Leitrim, Sinn Fein) | Oireachtas source

It is important to remember in this debate that the euro is inherently flawed in its design. I am not talking about the graphics. When Ireland joined the euro, it gained a currency it had no power to inflate or devalue. Intrinsically, that meant we lost sovereignty over our currency due to the flawed design of the euro. However, we must deal with the reality of our situation. All of our debt is denominated in euros which means the euro and Europe still hold the key to solving the current crisis. There are a number of actions which must happen if we are to find a way out of the mire. I will go into greater detail later in my contribution but note for now that such actions must include investment, debt write-down, the fulfilment by the ESM of its role and the ECB becoming a lender of last resort.

While the euro was certainly a contributing cause of the crisis, it was not its sole cause. The United States of America, Britain and Iceland all went into recession at the same time as Ireland and none of those countries is in eurozone. Like Ireland, those countries were hit by a crisis in the financial sector which had a knock-on effect on the finances of the State. Ireland and Europe generally need an investment programme to kickstart the economy. History shows that investment is necessary to get economies back on their feet. After the Second World War, Britain was virtually bankrupt, Germany had been reduced to ruins and large parts of Europe lay in a state of disrepair. European economies were on their knees. As a result, the Marshall plan was formulated and funding was pumped into European economies. Before long, those economies were booming once again. The European Investment Bank must learn the lessons of history to improve GDP across Europe. As GDP grows, debt will automatically decline as measured against it.

A write-down of toxic debt is simply a must if we are to find a way out of the crisis. Last year's austerity treaty attempted to enshrine public bailouts of private debt in law. The Cyprus crisis demonstrated that policy in Europe is only as firm as the latest application for a bailout.

The current policy pursued at European level seems to be haphazard and without joined-up thinking. At the heart of the eurozone crisis is the inability of some member states to repay their debts. Action must be taken in Europe to write down the toxic debt inhibiting economic recovery.

The ESM must fulfil its role to recapitalise the banks so that states do not have to. This was agreed in the June 2012 summit, where it was agreed to separate sovereign debt from banking debt. However, when the crisis in Cyprus hit, the ESM failed to act. If there is to be a functioning euro, the ECB needs to act like a proper central bank. It needs to become the real lender of last resort. There was no lender of last resort for the euro and so international markets began to increase their yield for buying sovereign bonds when the crisis hit. This created a vicious cycle, whereby it became impossible for countries to borrow from the markets, leading them to seek bailouts. We should not make moves to pull out of the euro but we need to recognise the serious flaws the currency has. At a European level, Ireland needs to put pressure on the European authorities to have currency reform. If this was done, it would truly be a major result for the Irish Presidency of the EU, the Irish people and the people of Europe.

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