Professor John McHale:

I refer to whether it will be necessary in respect of the banks being able to raise funding, which is the reason it is in place. It really is to allow the banks to be able to borrow. They are now well capitalised. Much of the uncertainty about the asset side of the balance sheet has been reduced, although certainly not eliminated, as I am sure Deputy Peter Mathews would underline. However, on foot of the transfer of the most toxic assets to NAMA, the uncertainty on the asset side of the balance sheet has reduced. Consequently, in respect of the ability of the banks to raise funding, including deposits but I hope longer term funding also, the guarantee is not as necessary as it was in the midst of the crisis. However, it was not what allowed the banks to sustain the deposits they had, particularly domestic deposits. When one does not have a state that ultimately is creditworthy, its guarantees do not mean an awful lot. What really stopped a complete run on deposits in the Irish banking system was the backing of the European Central Bank. That is the reason it was necessary to be extremely careful about how one dealt with issues relating to senior bonds. While that is a more complicated issue, one definitely needed to retain the support of the European Central Bank which often went beyond its normal lending operations to banks, particularly as it related to emergency liquidity assistance, ELA. However, to the extent that the guarantee implicitly is in place in order that the State can cover the losses of the banking system, I support charging the banks for the guarantee provided.