Brian Cowen (Laois-Offaly, Fianna Fail)

With respect, I am trying to be as helpful as possible. The statement that issued this morning before the markets opened was a statement of principle, with clarity, by the Irish Government as to what its intentions were in relation to maintaining the stability of the Irish financial system. What we are bringing forward today — I appreciate the co-operation of the House in this matter — is legislation to give effect to that statement and to ensure the powers that will be exercised by the State have a full statutory basis, in terms of the guarantee and the various mechanisms and arrangements that we are putting in place to bring about a situation where liquidity is available to the Irish banks.

The State guarantee, that is, the paper provided by the Government as a result of this morning's statement, enables people to go to wholesale markets and counter parties to obtain funds and to do so in the knowledge that the Irish Government is providing a guarantee on all deposits that would subsequently emerge as a result of those banking transactions into the Irish banking system for a period of two years, ending on 28 September 2010. We believe that was the period necessary in order to convince the market, with credibility, that the Irish Government was serious about what it was saying and doing. The indications today are that our signal to the market has been, thus far, successful. Regarding the risks, the greatest risk to the stability of the financial system of this country was, undoubtedly, on the basis of my very detailed discussions, looking at all the issues with the Minister for Finance and others yesterday evening after close of business, until the decision was made in the early hours of this morning, to do nothing. To make no move would put at risk the stability of the Irish financial system. In the office that I hold, I could not absolve myself from the responsibility of making the decisions. On the advice of the relevant people who have the competent authority in this area, I had to make that decision. Government made that decision with the impact that it has since had. That was the situation.

It is a question of looking at the situation that we are in, that has been caused by the turbulence of financial markets, what has been happening in Germany, the Netherlands, Belgium, the United Kingdom and the United States. A situation emerged and it was made clear to me that this was what was required. All the various aspects of this were discussed in detail and we came forward with a statement which emerged this morning. The legislation this evening will set out the mechanism that we are putting in place.

Fees will be charged for the State guarantee for the duration and for those banks that need it. If they have sufficient liquidity as a result of what has been emerging in recent hours, and what will e merge in the next days and weeks, they will not call on that liquidity at all times from the Central Bank, but where they do, there will be a fee for it. There will be a price for it.

The overall benefit for the Irish system and the Irish economy is that we have, hopefully, the functioning of a system that meets the requirements of the nation's economy and the nation's commercial and national interests. That is the situation we are in.

I understand that this is a difficult situation for everybody in terms of not having prior viewing of the legislation, which is in preparation and which will be available this evening. I thank the Members of this House for the co-operation that they are giving and for the understanding of the seriousness of the work that we are all doing here on behalf of the State to bring the necessary stability to this system and to ensure that we serve the people, given the very precarious circumstances with which we have been confronted in the past 24 hours.

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