Professor Patrick Honohan:

On the financial transactions tax, this has evolved in Europe. There have been many discussions on different kinds of financial transactions taxes and their scope. There has been a huge swing in what is being proposed. The paper to which the Deputy referred is an old paper about an international system. Many people were saying that a considerable amount of money could be raised through this. The problem is that the financial transactions vanish to other parts of the world or to other instruments that one has decided not to tax. So it does not yield as much revenue as some people believe. That is taken into account in the discussions in Europe and they do not expect huge revenue.

Along with the ESRI, the Central Bank conducted some further research with particular focus on the Irish situation, including the IFSC. Of course, it is not possible to really dig down and see what the effect would be. This is in the past 12 months and it is published and available. From memory we found the effects would be moderate overall. If such a tax was landed on top of us, we felt it would not be the end of the world, but obviously there would be consequences for some financial service providers. All taxes have consequences, but the Government has decided not to go with the group of countries that favour this tax. A tax such as this sounds fantastic and some people regard it as an opportunity to get at the part of the economy that caused the crisis. It is neither one thing nor the other. It is not terrific and does not help to stabilise the system. It does not raise as much revenue, but probably does not do as much damage as some people say it would. It is a different matter for the British Government that relies very heavily on a huge financial sector in London. The British might have more to lose from it.

I believe the Government's efforts to exit the programme are credible and we are backing them.