Brian Lenihan Jnr (Dublin West, Fianna Fail)

The extension of the deposit guarantee scheme to credit union savers on 20 September 2008 is an important development in safeguarding the interests of credit union savers because the €100,000 limit per depositor will cover the vast majority of accounts in credit unions. It therefore represents very significant progress in savings protection for credit unions. In this respect, the strengthening of deposit guarantee arrangements is a clear demonstration of the Government's obligation to protect the whole financial system, to secure its stability and to ensure that all deposits in all Irish financial institutions are safe.

In announcing the decision to increase the deposit guarantee level and to include credit union savers in the scheme, I stressed that the Government is committed to the stability of all of the Irish financial system, so that money placed with an Irish credit institution would not be at risk.

I believe that the measure provides additional reassurance to all retail depositors in Ireland particularly as the new guarantee level is now among the highest in the European Union. It was a particular priority for Government to look after the interests of credit union savers and to safeguard their competitive position in regard to the mainstream financial institutions, given the very important role played by credit unions in encouraging savings by all in our community.

The action taken by the Government is complementary to the continuing discussions between the Registrar of Credit Unions and the representative bodies for credit unions regarding broader savings protection arrangements. As Deputies will be aware, the existing Irish League of Credit Unions savings protection scheme, SPS, has played an important role over an extended period of time in helping to support credit unions that have experienced financial difficulties.

Stabilisation mechanisms, if properly designed and effectively implemented, can play a very important role in maintaining as a going concern a credit union that is experiencing temporary liquidity difficulties. It pre-empts the risk of failure and the need to activate the deposit guarantee scheme.

There is, however, a shared recognition between all stakeholders that these types of arrangements must be modernised to take account of the evolution of the overall regulatory and financial environment. It must be an objective for all relevant parties to work together on an intensive basis to come to a common position to the appropriate approach to credit union stabilisation for the future. My Department will, of course, continue to work with the registrar and the representative bodies to support the achievement of this objective.

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