Brian Cowen (Laois-Offaly, Fianna Fail)

The role of Government on credit growth and associated indebtedness has a number of distinct dimensions. First, it is important to note that, as far as overall economic and financial stability are concerned, the relevant measure of credit encompasses both public and private sector credit and debt levels. The Minister for Finance has a key role in this regard in ensuring prudent management of the budget and overall sustainability in the public finances. In this context, Ireland's fiscal performance is among the best in the developed world with Government indebtedness the second lowest in the euro area.

Responsible budgetary policy has made a significant contribution to economic performance overall, to the maintenance of low unemployment and to the achievement of record employment levels.

Similarly, the growth of private sector credit and indebtedness needs to be assessed in an appropriate context. In evaluating the financial position of the private sector, it is too narrow an approach to consider the level of indebtedness in isolation from the asset side of the private sector's balance sheet. A high proportion of household indebtedness in Ireland relates to borrowing for house purchases which, in turn, creates an asset for the households. In the same way, borrowing by the business sector underpins high investment levels and the creation of business assets yielding future income.

Account must also be taken of private sector savings levels. The Government has been actively promoting saving by individuals in the recent past, notably through the SSIA scheme. Comparatively high household savings rates by international standards in Ireland support the sustainability of household debt overall.

As far as looking after the interests of the individual borrower and the individual investor is concerned, the function of Government is to provide an appropriate legislative framework for regulation of the financial services sector, one that is both comprehensive and robust. I am satisfied that on foot of the progress made in recent years, especially in establishing the financial regulator with a particular focus on the interests of the consumer, we have such a framework in place.

Within the implementation of the overall legislative framework, private sector credit growth and debt levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European system of central banks and its functions, as the financial regulator, concerning the prudential supervision of financial institutions and the protection of the consumers of those firms.

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