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

The stress tests will be performed on our financial institutions later this year, having been postponed since last year. Professor Honohan has indicated that he does not like predicting the future but are there signals of a concern as we enter into the process? Those concerns may relate to the requirement for additional capital, however large or small that would be.

The next question is related to the workings of the European banking system. The OECD has released a report on capital ratios for banks across the European system, although I am not sure if the witness has seen it. It has suggested that the core tier 1 capital ratio is not satisfactory as it requires the banks to weight their own products for risks. It also has government bonds from euro member states as non-risk weighted. Essentially, there is a reliance on the banks. The OECD has suggested something similar to the United States, where there is 5% on all assets. The report argues that European banks are under-capitalised to the tune of €400 billion, with France and Germany being the leaders in this under-capitalisation.

There is obviously weight behind this OECD report. The target of the ECB is 9% core tier 1. Is there any concern within the ECB about the targets? Is there a concern that banks across Europe could be under-capitalised?

Obviously, €400 billion is a huge amount of money across the European Union.