Mary Coughlan (Donegal South West, Fianna Fail)

The Deputy is a man who always knows his mind. I thank the Minister for Finance and all those involved over the past several days in dealing with these important issues.

The Credit Institutions (Financial Support) Bill is about protecting the public interest at a time of deep disturbance in international financial markets. It is about protecting depositors and giving confidence to those international banks that lend to our banks. Its effect will be to ensure liquidity is retained in the Irish financial system. The importance of maintaining such liquidity is key to the ongoing ability of not just our banks to do business but to that of our small and medium enterprises. Their ability to get and retain credit impacts directly on their ability to do business every day. The actions of the House tonight in considering the Bill are key to the security and stability of our economy at a local and national level.

The current crisis has its roots in the credit markets of the United States. While Irish institutions have no significant exposure to the kind of assets that have sparked this credit crunch, over time the global situation has taken its toll. While in the past individual financial institutions have fallen because of one event or another, the number of institutions which have been the subject of liquidations, forced partnerships or state takeovers of one kind or another is growing.

Fortunately, Ireland has been spared the worst of this but Irish financial institutions are as reliant as any others on the international capital markets. This means that when liquidity — the lifeblood of finance — starts to become harder to access, the institutions find it increasingly difficult to carry on as normal. This liquidity shortage is at the heart of much that is happening in financial institutions worldwide. Across the world, creditworthy institutions are being placed under stress because of the difficulty of raising finance for their operations.

Notwithstanding the many flaws in the system becoming evident, modern economies require the presence of a broad range of financial services. In particular, the availability of credit on reasonable terms allows for entrepreneurial activity, for the development of private and public infrastructure and for the generation of economic growth and employment. It is essential that toolkits are available for the protection of the financial system's stability, particularly when it is being challenged globally.

One tool in the toolkit has already been deployed. The Government has announced its intention to give a guarantee to several financial institutions. This decisive action gives support to the creditworthiness of the institutions concerned, making it easier to raise cash for operations and allowing them to continue serving their customers. That guarantee is the appropriate tool for the current situation. In other circumstances, other tools might be necessary.

It is important that where an institution runs the risk of ceasing to be viable, it can be brought together swiftly, with the minimum of fuss, with a stronger partner. Section 7 provides that in certain circumstances the Minister for Finance can step into the role, temporarily, of the Competition Authority, to enable competition issues in the bringing together of institutions to be considered fairly, swiftly and in the full understanding of the financial stability issues concerned.

We hope, of course, this tool will never be used. Even if it were, there would be little question of damaging competitiveness in a sector. It cannot help competitiveness for an institution to go to the wall which could otherwise thrive as part of a different structure. The public interest can often demand broadly based and swift consideration of strategic options in achieving the best outcome for the people. It important that we allow for that.

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