Brian Cowen (Laois-Offaly, Fianna Fail)

The scheme has not been approved by Government. It is at an advanced stage with work being done on it by the Department of Finance, the Central Bank and the Financial Regulator. The preparation of the framework for the scheme to give effect to the guarantee is at an advanced stage. The objective is to enable the terms and conditions of the guarantee to be prepared in accordance with the objectives of the legislation. The Government is anxious to enable this process to proceed and be completed, including the consideration of draft schemes by the House, as soon as possible. I cannot say exactly when these will be finalised. There will be a need for discussion between the authorities and the EU Commission to ensure the scheme meets State aids and competition requirements, which is important. This is an evolving situation.

With regard to question of the provisions in the banks themselves, what we did last week related to the need to provide confidence in the market as we dealt with capital outflows from Irish credit institutions to the extent that we were advised it had reached the stage where the Government needed to act and, on that basis and on that advice, we made the decisions we made. The question of how lending practice proceeds from hereon in relates to the work of the Financial Regulator and the Central Bank in dealing with the overall financial stability of the system. The legislation considered by the House last week provides options in that regard.

Clearly, the issue dealt with last week was the liquidity of the Irish financial system and the need to improve liquidity where global financial markets had dried up to a large extent. The position has not dramatically improved in a global sense and the issue still remains. We are not in any way out of the woods regarding this matter. The banks and credit institutions must continue to do their work in terms of conducting their business and taking account of the new realities.

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