Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The decisions of the Council on 29 June were much wider than any commitments made to Spain or Ireland. The primary decision at that Council was for banking union, and that consists of the three pillars of supervision across Europe, a mechanism whereby insolvent banks across the eurozone and the Union would be resolved centrally by a European mechanism, and a guarantee scheme through insurance for depositors across the Union. The best way to understand it is to consider how banks work in the United States. If a bank fails in Texas, the Texan authorities would not have the responsibility for the resolution of the institution. There would be no big fuss and it is part of the system.

In that context the commitment was made to separate banking debt from sovereign debt. In this light, a commitment was also made to the possibility of a direct recapitalisation of Spanish banks through use of the European Stability Mechanism, and then there would be examination of the sustainability of the Irish debt position, with all sovereigns treated equally.

It is true to say we are pursuing, as the Deputy noted, both sets of negotiations. We are engaging on the promissory note, as we have been for some time. The deadline in that regard is effectively the next payment date, which is 31 March next year. We are not waiting until then but pushing for an earlier resolution on that. There is also a position on the trading pillar banks and how we might be recompensed for the fact that the Irish taxpayer ultimately carried the responsibility for recapitalising both Bank of Ireland and AIB.

The Deputy knows from the statement of 29 June on banking union that before any direct recapitalisation of the banking system in Europe can occur, the supervisory aspect of the banking union must be put in place and seen to be working. That is on a longer timeframe than the promissory note to which I referred.