Dr. Donal Donovan:

Some of these questions can only be answered with some explanation and in context. Our book refers to the table in the IMF report. It has far more detail and I am happy to provide the reference in the original report, which is on the public record. The Irish guarantee was certainly the most comprehensive in the sense that it included subordinated debt. I can come back and talk about that if people wish. None of the guarantees referred to in the IMF included subordinated debt. There is an issue there, of course.

The coverage in terms of bonds and senior debt was not that dissimilar - I have chosen these words advisedly - to that contained in many other guarantees. I cannot say it was exactly precise because one would have to look at all the legal documents. Ex post, it is probably true that the cost of the guarantee, either the ex antecost of €400 billion covered or the ex postcost in terms of the €64 billion or €40 billion or whatever the number, was well up there among the highest. I think there are a couple of cases, perhaps Indonesia, where it was pretty high too. I cannot make an exact comparison.

The guarantee is of course very controversial. We examined it for our book and we discuss it at some length. We took the approach that was important to ask if the guarantee was very bad and such a disastrous decision at the time then what other alternatives were available and would they or might they have led to a better outcome. The analysis of this question starts with the proposition that, for good or bad, there was a major agreement among Ireland, Europe and elsewhere that no bank should be allowed to fail in Ireland, for good or bad. I will come back to that again on the question of Anglo Irish Bank, which was the last question that the Deputy raised.

The second key point was that Europe, in the form of the ECB, we assume, had made it quite clear to the Irish authorities in the days before the guarantee the previous week that there was no pan-European solution coming, and that every government, be it in Ireland or elsewhere, had to do whatever it took and whatever was needed to solve its problem. Given those two constraints - they may not be good constraints and they may not be right, but they were constraints - we have looked carefully at other alternatives. We looked at the alternatives of delaying, doing nothing, waiting a week, ELA, nationalising Anglo Irish Bank and excluding deposits. When we go through each of these - I am happy to spend as long as people are interested going through them, but I know there are time constraints - it is difficult to conclude, in our view, that either of them would have led to a materially different outcome at the end of the day, unless one assumes that senior bondholders were going to be burned.

Whichever way one looks at the analysis, one comes back to the same point. Are we going to burn senior bondholders? For example, it has been argued that only new debt should have been guaranteed and that existing debt need not have been guaranteed. That is true but it would only have made a difference if, at the end of the day when that existing debt fell due, someone concluded that we were not going to pay it or pay only part of it. In other words, we come back to the burning of the bondholders. Otherwise we would have had to give another guarantee to get the debt rolled over or we would have just paid it, which is what we ended up doing and is where the €64 billion came from. That is the fundamental proposition and, to put this as neutrally as possible, the record of the following four years showed that, for good or bad, the European position was that there was to be no burning of senior bondholders. I am not suggesting that was the right view but it was the view and it did not change. It did not change at the time of the Irish bailout in November 2010 nor in March 2011 and, indeed, it was supported by the United States at the time, as we all know.