Mr. Séamas Ó Muilleaneoir:

Ar dtús, ba mhaith liom focal buíochais a ghabháil leis an gCathaoirleach as ucht an cuireadh a thabhairt domsa agus don Public Banking Forum of Ireland, PBFI, teacht inniu agus toradh ár gcuid taighde agus eolais a roinnt leis an gcoiste.

The Public Banking Forum of Ireland is a non-profit, non-funded, independent organisation with a growing support across the country. We clearly support and promote the introduction of a comprehensive public banking network in this country based primarily on the credit unions, but most of all, on a system that puts credit back into the hands of the general public. That is almost the sine qua nonof the PBFI. For the purposes of clarity, the Public Banking Forum of Ireland wants to put it on the record that the creation or facilitation of credit, of what we all call money and use as money, has effectively been in the controlling hands of private entities since the Central Bank Act 1942.

That process has consolidated down into the hands of three or four chief bank executives in the current system. No matter who they are, that is the system. As the late US President John F. Kennedy supposedly said, "An error does not become a mistake until you refuse to correct it". The impact of the above decision has been accounted for here by those on my left and right, but, in fact, the committee has only heard the tip of the iceberg. The golden rule is that he who makes the gold calls the shots. He who creates the credit calls the shots.

A comprehensive public banking system, owned in perpetuity by the Irish people, which can be neither bought nor sold and is backed by the natural assets of the State, can correct that mistake. While it is far from my function or my authority, or that of the PBFI, to dictate policy, we believe that we have provided, in the linkages here and other information that we have available, the material to back up what we have to say. We believe that if it cannot be refuted, then it should be implemented.

Money, which is better referred to as credit, is the life blood of the economy. Banks control its creation, the purpose for which it is loaned and who gets it. Banks create the money supply when they make loans and in this process, they are facilitating credit creation by each man woman or person. It is this credit, released by the banks, which we use as money. Approximately, 3% of the money supply is in cash, as notes or coins.

Banks control where the credit is loaned. For the most part, they decide who is facilitated with credit and for what purpose, and that purpose can be either for the productive economy or for asset speculation. We need seriously to discuss, debate and decide what constitutes the productive economy. Credit facilitation by the commercial banks for asset speculation leads to property price escalation, boom-bust cycles and, eventually, wealth transfer. UK figures for credit creation for the decade up to the crash of 2008 show that only 8% went to businesses outside the financial sector.

The current banking system in Ireland can be referred to as three or four commercial banks, with Bank of Ireland, AIB, Bank of Ireland and Ulster Bank controlling 95% of lending to small businesses. Irish companies pay some of the highest rates of interest in Europe. In effect, credit control is in the hands of three or four individuals. According to the ISME Bank Watch Survey Q3 2016, access to finance is still a problem in the bracket up to €0.5 million. Above that, there is a certain facility available. We would suggest that should be done differently as opposed to funds being administered from the ISIF and the SBCI. Nonetheless, there is a big gap in the market between what the credit unions have been providing and what needs to be provided in that small sector. SMEs require volumes of credit. It needs to be professionally administered, properly focused, and fully supervised in a system which is ethical for all concerned, and not based on collateral collection. As the committee has just heard, this does not exist today.

The banking situation in Ireland has deteriorated since the crash. While the banks at that stage were deemed to be systemically too important and they had to be bailed out, the system now has contracted down to effectively four. We would suggest that the "’too-big-to-fail"’ gun is already to our heads again and I would ask the following questions. Is CBOI regulation fixated on the small people rather than the IFSC? Who actually owns the €150 billion in assets, debts or loans - call them whatever one likes - held in SPVs, and who owns the €430 billion held in FVCs? Who can explain the CIA's figure of approximately €1.7 trillion in total Irish debts? Do savers and depositors understand EU 2012 bail-in legislation? Do they understand the European Banking Authority, EBA, findings that our banks are among the riskiest in the EU? Furthermore, who owns Irish Payment Services Organisation, IPSO, a tool by which complete control is exercised over our cash machines and all the payments within the State? I suggest that until that matter is totally analysed and dealt with, we will make little progress.

Credit unions are being driven out of existence in the interests of the commercial banking industry. We have known this for quite a while because the same pressure is being exercised from the ECB on the German Sparkassen model and on the co-operative models. Our most recent contribution to it is that they will be lucky to end up with 600 independent units whereas up to now they have operated 1,430 publicly-owned banks in Germany. The pressure on the credit unions is not unique.

Failed economic theories will not work. They will not solve Ireland's problems. Proven economic principles must be applied. New thinking is required to arrest the slide into total urbanisation of the Irish people, and total dependence on foreign direct investment, FDI. The concept of growth needs to be at least debated and defined. By and large, growth equals growth in debt - that is how it is defined.

A serious restriction on credit facilitation has to be brought to bear. Credit for speculative purposes must be seriously restricted in support of SMEs, the productive economy and communities. At least ten regional community banks across the country are essential, and utterly affordable over five years at a cost of less than €150 million. That is less than €40 per head of population, which would hardly break the unborn.

We believe that the German Sparkassen model best suits Ireland. That model can be modified to suit Ireland and expertise from the Savings Banks Foundation for International Cooperation, SBFIC, can be sought. It is a model proven over 200 years. The post offices could also pursue the highly successful New Zealand Kiwi post office bank model as established in 2002, now with over 800,000 customers and, I understand, having cleared €80 million in profit last year. If that is the case, it must have cleared the bones of €500 million since it was set up on 2002.

If Ireland were to adopt the German model of community banking, we would need 45 to 50 community or publicly-owned banks of some shape, make or form. Ireland has a perfect framework from which to build, in the public interest, a comprehensive public banking network. We have the credit unions and the An Post network which are a perfect platform. We suggest that the expertise of the SBFIC expertise be employed to design the model for us. Some years ago it made us the offer to do so at cost.

Community banks serve a range of purposes. They put credit into communities and they break up the monopoly. When they are properly focused, such as the German Sparkassen, they fund and support the small SME sector, which provides 70% of jobs. They reduce the control of and dependence on the "too-big-to-fail" banks. Regions are supported as is the indigenous potential of the state.

The safety of deposits becomes a real issue because, whether people know it, banks do not take deposits; they borrow money from people who think they are making deposits. The nature of a private company is to make a profit. Private banks pursue profit and that is all they will do. We have seen plenty of this. Private entities should not be allowed to hold a gun to the heads of the people and the Government over the provision of credit and capital. Private entities cannot be allowed to decide whether to house our homeless, treat the sick or deliver quality of life to Irish citizens tomorrow or ever.

Every project requires three items, which are the will, the skills and the capital. We have the will and we have the skill, but the capital is in the hands of a tiny number of people. Community banks would change this. The question of market share needs to be raised and I will return to this point when answering questions.

A comprehensive public banking system owned in perpetuity by the Irish people is a change that would put a stop to the monopoly. If we were to look at the German model, which I hope we will discuss, we can clearly see it has a very different policy. A total of 89% of businesses in Germany have a turnover of less than €1 million. We have many dairy farmers and shopkeepers turning over this amount. Only 1% of businesses have a turnover of more than €50 million. Co-operative banks, and the Sparkassen banks in particular, are the backbone of the German economy. I have statistics if committee members want me to read them out. A total of 3.7 million small and medium enterprises form the backbone of the German economy. They represent 99.95% of all companies. They employ 29.1 million people, or 68% of the working population in Germany. They provide training for 1.2 million young people, which is 89% of all trainees. Micro-enterprises with fewer than ten employees provide 34% of workplaces in Germany.

Our dedication in this country is to foreign direct investment and bigger is better, and these are absolutely flawed concepts and must be corrected. Community banks are part of the process of re-empowering communities and taking back from the vested interests the control they have over every man, woman and child. A commercial banking industry which is 98% self-serving and bleeds 40% of the economy full time needs to be changed. If the committee wants me to translate this in a simple way, at present our property prices are three times what the average individual can afford. This arises primarily out of a lack of credit control.