Professor Patrick Honohan:

I do not hold a strong view one way or the other. There is no doubt that 123% is a high debt ratio but some countries have higher figures. We got it down remarkably quickly before in the 1980s, if the Deputy can remember what happened then. It reached a peak in 1987 or early 1988 and within 20 years we were down to a figure of 27% or thereabouts. It will not be as easy the second time, but we can get away from 123%. By the way, this figure includes a large cash balance which has built up and we are in a comfortable position to move forward and fund ourselves on the basis of our own credibility.

With regard to the question of whether the Europeans help us, we are always talking about them helping us, but that is a little like the béal bocht. One must be sparing and careful in dealing with this matter. When we entered into the programme, things were not as we would have liked. I have already talked about insurance against tail risk, but we did not like the interest rate because to us it seemed very high. We knew that it was what was available but that it could be negotiated downwards. A lot has been negotiated and the term has been pushed out - Deputy Joe O'Reilly talked about intergenerational mortgages - both for the explicit loans and the promissory notes. This represents a very considerable easing. The lowering of the interest rate means that our worries about interest rate levels on the European loans have gone away and we are in a much better position than we were. Should we be looking for more? I am sure that it is the Government's business to look for as much as it can in as shrewd a way as possible. Disciplined behaviour is the key in order that the other parties do not think that these are people who will never stop asking them.

One of the issues raised was whether should there be a fund or a way to mutualise debt in Europe. This is forward looking rather than backward looking. It is much harder to negotiate about bygones. Part of the vision of the European Union, the fiscal dimension, is that there be a greater degree of common decision-making and, therefore, common responsibility and perhaps common mutualisation of indebtedness in the long run. That is where this is bringing us, but at what speed I do not know. It requires not just a greater move towards fiscal union but also the democratic legitimacy that goes with it, as otherwise it will not happen. Borrowers and lenders must be satisfied about its democratic legitimacy. This is one of the things, as I attend a European affairs committee, that concerns me most - that and what I used to experience in meetings 20 or 30 years ago. The crisis has eroded trust in the European Union. Those of us involved in European affairs, like members of the committee, feel this. Therefore, we need to rebuild it, particularly along the fault line of borrowing and lending. It can be done. It is a challenging political process and presents a challenge to institutional design in order that not only do people trust each other as good people with whom to deal, but also that they deal within a system of rules and understandings that works fairly for both sides. That is a big challenge. The decision-making structures in Europe must also be improved because so many decisions have had to be taken in a rush late at night.

One of the questions was related to a deposit guarantee scheme. Let us take a look at the situation in Cyprus. A lot of damage was done by the first decision to be taken. The attitude was whatever about a deposit guarantee scheme, money could be taken from deposits. On consideration, nobody thought it was a good idea. People looked around and asked from where had the idea come. I think it came from an inadequate process and the decision-making process was under pressure in unsuitable circumstances. It will take time to restore confidence. I do not know whether it has had that much of an impact, but people are talking about the matter. I have often spoken to people about the components of banking union, supervision, resolution and deposit guarantee. They chose to leave the deposit guarantee and did not view the matter as being urgent. Now, because of what happened in Cyprus, there is no way the issue of a deposit guarantee can be taken off the table. Of course, when it is at European level, people stop worrying about it.