Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

That is fine but that is not what it is for. I cannot state that any more frankly than that. We have done much in the past decade. As a nation, we have recapitalised the Irish banks. A core objective of the EU banking union is to separate the sovereign fund from the banks and prevent the use of State funds to bail out banks. The EU banking union provides for a single prudential supervisor through the Single Supervisory Mechanism, SSM, a single rule book and a Single Resolution Mechanism. This aims to improve coordination and militate against negative spillover in the future.

The bank recovery and resolution directive is designed to impose the cost of bank failures on the banks, their shareholders and the holders of their eligible liabilities for bailing in. Based on these and wider banking union changes, and the more intrusive and assertive regulatory regime, I do not ever expect the contingency reserve fund to be required to bail out banks. That is because the structures have been designed for the past decade so that the shareholders and those who have eligible liabilities are designed to bail in. That is the correct procedure to recapitalise banks. The regulatory landscape has also been overhauled at national level since the financial crisis with the Central Bank Reform Act 2010 and the Central Bank (Supervision and Enforcement) Act 2013. In addition, the Central Bank is now acknowledged as being one of the most robust and challenging institutions in Europe. The era of light-touch regulation is over.

Under the Fiscal Responsibility Act 2012, "exceptional circumstances" are defined as either a "period of severe economic downturn" or "a period during which an unusual event outside of the control of the State has a major impact on the financial position of the Government". This fund is not, therefore, for what the Deputy is suggesting it is for. I can only state that so many times and in so many ways. It is not to bail out banks. Other structures have been designed in recent years for that purpose. Deputies Michael McGrath and Jonathan O'Brien were involved in that process, as were the Chairman and other Deputies. It was to ensure that bailing out no longer occurs and the structures are designed so that shareholders and other eligible liabilities are there to bail in.