Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank Professor Honohan for his attendance. I have three questions following on from Professor Honohan's contribution. He made the point that supervision and resolution need to be placed at the same level and that if this does not happen, there will be a question of lack of equilibrium from a political economy point of view.

My question is whether supervision and resolution at non-national level raise issues of equilibrium and democratic accountability. A central pillar of how financial regulators have done their work to date has been the fact that they are politically independent. They are not elected but appointed and are independent of the Government. If there was a rerun of what happened from 2007 to 2010 and the decisions to deal with bank costs and bondholders were all made outside the country by people who were not elected by the Irish people or accountable to them, it would raise major questions about accountability, a central theme of what we are doing. It does not just concern monetary union but also political union. If major decisions on bank regulation and resolution are being made by authorities independent of national governments, as opposed to being independent within their jurisdiction, how do we square the circle and the expectations of people living in the countries affected? It appears that a large part lies in the answers in which reference was made to equity buffers and the role of other mechanisms. It appears we are heading towards other tensions that we should discuss. I am interested in the contribution of the delegates on that point.

Whither the deposit guarantee scheme post what happened in Cyprus? Questions will be raised about how we bolster the credibility of a new scheme, given what happened there. Ms Phil Prendergast, MEP, put the question on the austerity experiment in Ireland. In the case of a country that does not have its own currency and has massive borrowing requirements, if no one will lend, what is the choice except to close the gap, which is what we are trying to do? I am interested in the perspective of the delegates on whether there are other options that were not apparent when these decisions were made.