Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

Exactly. That is because of the debt. He is saying that because of our national debt, aside from the tracker people, it was the Government that benefited from quantitative easing, rather than the real economy, the people, the citizens and the businesses, whereas in other countries where the debt-to-GDP ratio was 60% to 70% lower than ours, that same benefit did not have to be commandeered at Government level and at the equivalent to NTMA level, and it worked its way straight into the economy. Professor Honohan has implied that because of our debt, the Government grabbed the benefit of the quantitative easing and less of it has trickled into the real economy than would otherwise have been the case. I know the tracker people benefited, but it was almost by accident because of the level of debt. Why was some of the benefit of quantitative easing not directed to what Professor Honohan said was the biggest problem, namely, the non-performing loans? He should have been able to focus some of it there. It seems we have not benefited fully from that.

I do not agree with the ECB rationale that 2% inflation is a good thing. I know Professor Honohan said we did not want negative inflation, but we do not want it to run away either. Can he explain to us why we should not have it at 1%? The biggest single problem with the EU is that there is a closed-shop mentality.

We even see it in people trying to cross the Mediterranean. They do it in every walk of life when it comes to financial matters. They look at themselves as a closed shop, but they forget that they are in a global economy. If an annual cumulative interest rate of 2% is being promoted over a ten year period, after ten years the cost base of operating in the European Union will be 25% higher than the cost base of operating in other economies that do not have policies involving such levels of inflation. If we continue to make Europe a less attractive place for global investment, investors will head to economies that do not have a policy of incrementally increasing costs each year. I do not understand why Professor Honohan thinks 2% is the right rate. That is my question on quantitative easing.

Professor Honohan mentioned that the IBRC promissory note went to being Government bonds. He has said the Central Bank will make fabulous profits out of the new arrangement because it will be able to sell the Government bonds earlier and thereby reduce the debt. He might tell us what his actual projections are. If he does not have his figures with him - I do not see him with a big folder - he can send them to the committee at a later stage by way of correspondence. What are his projections for the benefit to the Central Bank from the system as designed, over the period in which the change resulted, compared to how he now sees it unfolding in the next few years? He might send us a note on the improvement that will be made in the profit of the Central Bank.

I would like to conclude by asking a question about the benefit of the note. Is it required under EUROSTAT rules to go against the national debt, or can any of it work its way into the Government's current account? Professor Honohan can come back to us in writing, if necessary.