Stephen Donnelly (Wicklow, Independent)
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I thank the Minister for his detailed statement. He asked for observations and questions. I will make one observation and then put some quick questions. I strongly support the Minister’s position on the primacy of deposits. It seems like an odd thing. It does not pass any common sense test that people who put a few quid in the bank should be on a par with professional investors. I fully support anything the Minister is doing there. It would be great to see some detail on how that algorithm might work. Will shareholders go first and, if so, then what? Will it be a 50% cut for junior creditors or a 20% haircut to senior creditors or a 5% cut? It would be interesting to know whether the plan is for senior bondholders to take a full hit and only when they are exhausted would there be a move on to depositors. Will there be a sharing but less of a haircut for depositors because of their primacy? I full support what the Minister is doing in this regard.

We were at the conference in Brussels yesterday on the blueprint for the EMU. It was very interesting and one thing that struck me was that there were people there from the Commission, the Parliament and the ECB. There was great confidence in the new tools of which there are many, including the six-pack the two-pack, the competitiveness instrument and many other new tools. It struck me that there was some group-think going on. There was almost an over-exuberant confidence in these tools.

One of my macroeconomics professors was a man called Jeff Frankel. He said to us on our last day at our last lecture that everything he was teaching us was wrong. This man used to advise Clinton and he was on the economic management council. He was a smart cookie. His point was that macroeconomics is in its infancy. He said that five years previously the material he was teaching to his students was different from what he taught us and that five years on it would be different again. The point was that if one wishes to stay on top of macroeconomics one must keep upgrading one’s knowledge and changing the modelling and so forth.

Given the amount of detail and scorecards and so on, the way Europe seems to work is that once we get these things agreed, it is rather difficult to secure change because there are 17 or 27 members. It is simply an observation for the Minister to consider for ECOFIN. He may wish to emphasise that these things must be flexible because the banks will always find ways of getting around the metrics. While I broadly support some of these tools - there are some good ideas contained in them - I do not see any provision for flexibility, such as, for example, annual reviews or reviews every two or three years to determine whether the banks are managing to circumvent what we are trying to measure them on. They will put a vast amount of resources into doing exactly that. That is simply an observation for the Minister. Some flexibility in how that is supervised in the coming years would be very useful.

The issue of pensioners being wiped out in IBRC is a conversation for a separate day. I realise it is nothing to do with ECOFIN, but part of it is relevant. I gather a decision has been taken by the liquidator that the pension funds, which were deposits in, for example, a six-year deposit account, are not covered by the deposit guarantee schemes. That is something to bear in mind. Does the Minister agree with that position? Will the Minister be representing the view at ECOFIN that pension funds, even if they are not strictly deposits, should be covered by the European deposit guarantee scheme?