Brian Lenihan Jnr (Dublin West, Fianna Fail)

To be honest, I felt it was appropriate that it should be in the scheme in any event. I had raised the matter with my officials before the Commission expressed its view on the matter. A fine balance has to be struck on this issue. As Ireland is a small exposed economy, with a banking system that is crucially and critically dependent on international finance, it is important that the Government guarantee aims to attract funding into the banking system to the maximum possible extent. On the other hand, we have an obligation as part of the EU not to promote excessive dependence on such forms of lending. I have tried to strike that balance in the guarantee scheme that is under discussion. I should point out, in practical terms, that there is a significant overlap across any bank's wholesale funding base. The same investor can often buy a bank's commercial paper debt, senior debt or dated subordinated debt. If the bank did not call these bonds, this large source of funding could be cut off, irrespective of a guarantee on the senior debt. I took those considerations into account when drawing up the part of the scheme relating to this issue.

Deputy Burton was also concerned about my power to vary the scheme. I assure her that the power in question cannot be used to materially rewrite the scheme. It relates to the operation of the scheme only. I am constrained by case law in the extent to which I can rely on that clause. Perhaps the Deputy will remind me of the other questions she asked.

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