Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

Go raibh maith agat agus curaim fáilte roimh Professor Honohan. I welcome Professor Honohan to this meeting. I always enjoy his engagement with this committee and listening to his opinions outside of the committee. I have a number of questions but may not have time to get through them all. Regarding the recapitalisation of the banks - which the Government has decided will only apply to the pillar banks - cold water has been poured on it by various commentators in recent days. An editorial in the Financial Times yesterday stated that there had been a row-back in Europe's position regarding the possibility of the ESM recapitalising banks directly. It suggests that the European Union will ask member states to guarantee the losses of the ESM or to put up 50% of the recapitalisation funding for the banks. In today's edition The Wall Street Journal provides details of the meeting that took place last week between eurozone leaders and suggests that there is nearly unanimous agreement that national parliaments would recapitalise up to 4.5% of core, tier 1 ratios. In other words, the first half of the recapitalisation requirement would be provided by national parliaments. The second half is where the issue gets sticky and that is to be discussed next Monday. The suggestion is that there would be a joint investment by the ESM, along with national parliaments, up to 30%. If any of that were to happen it would basically tear into shreds the agreement that was struck last summer regarding separating sovereign and banking debt and breaking that vicious circle. Obviously Professor Honohan is head of the Central Bank here but as a board member of the ECB, has he seen the Commission's latest report, which is very short, stating this? Is he aware of the discussions that have taken place and is cold water being poured on this? Are attempts being made to water down what was agreed in June?