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

The seismic shift that Deputy Doherty referred to with a sarcastic tone has actually occurred, because the seismic shift was to break the vicious circle between the banks and the sovereigns. That was the seismic shift, as was the substituting of bailouts with bail-ins. We are bringing the resolution arrangements forward now, in consultation with the European Parliament. Eventually, they will be turned into a directive and have the force of law throughout the community. That is the seismic shift. The banking union will be like the banking union in the United States whereby the taxpayer will not be involved in bailouts. Instead, the assets of the banks will be used for bail-ins.

Deputy Doherty raised the retroactive question. It is retroactive from the time the ESM is in place and the detailed operational elements that are not settled yet will be settled. There is no commencement date. It is back before that time but there is no base date that prevents us from going back. I am working on the assumption that it applies to the Irish banks and it is on a case-by-case basis.

The Irish EU Presidency drove this and the Irish Minister for Finance ensured that this is in the regulations. Everyone knows the intention. How it will work in practice? I am approaching it like I approached the promissory note negotiations. I am opening up a new negotiation and it will be long and slow. We will move carefully to get the best result for Irish taxpayers. Working on a case-by-case basis suits us. The committee will recall the statements made by Chancellor Angela Merkel and President Hollande stressing the uniqueness of the Irish case, Ireland being a special case and so on. That is why we work on a case-by-case basis.

If I was to promulgate a negotiation that applied equally to Greece, Portugal and Spain as well as Ireland, we would not get beyond first base. The only way was to position this as a unique solution for Ireland because we were not allowed to bail-in the bondholders. The European Central Bank prevented us from doing that. According to the bank, it would have had a contagion effect in Europe. If we participated in preventing the contagion from spreading to the European banking system, then we have a case on which to build. Anyway, all these things are slow and must be carefully built. We will see how we go, but we are in the game all the time.