Brian Lenihan Jnr (Dublin West, Fianna Fail)

The report prepared by Dr. Bacon has been passed to me and will inform the Government's ongoing considerations involving the Financial Regulator, the Central Bank, the NTMA and its legal and financial advisers. Structurally, reform is needed in the regulatory and supervisory system. I will announce in more detail the sweeping reforms that will be introduced in due course but they will underpin the approach to the global financial crisis and the difficulties facing our domestic banks. The financial crisis, as it unfolded, has demanded these interventions in many ways. Governments have guaranteed the liabilities of banks, injected capital into them, provided short-term liquidity facilities to ensure they can access funds as required and, in a number of cases, have taken banks into public ownership.

I am determined that the actions of those bankers who have clearly damaged our international reputation will be addressed. We will reform, rebuild and restore our international reputation as a global centre for banking and finance. New standards of corporate governance will provide confidence for those that are here and those that wish to locate here that Ireland is committed to having the highest international regulatory and supervisory standards. I am moving, as a priority, to reform the regulatory structure through the proposed full integration of the Central Bank's responsibilities with the regulatory and supervisory functions of the Financial Regulator. This reformed structure is expected to deliver these new high standards of banking and financial regulation and corporate governance that the people expect them to observe. The creation of a single oversight institution charged with the important functions of ensuring financial stability, reinforcing prudential supervision and pursuing regulatory integrity throughout the entire financial sector in Ireland will involve a fundamental reform and I will look to ensure best EU and international practice is applied to Ireland's regulatory system. We want to send a strong signal that the practices followed in some of our institutions are unacceptable, that the regulatory lapses will not be repeated and that Ireland remains committed to the continued development of a soundly based, well regulated and competently supervised financial services sector.

It is vital that we continue to take all steps necessary to get the banking system fully operating again. A fully functioning, well regulated financial system that attracts confidence and credibility inside and outside the country will be fundamental to our economic recovery. The recapitalisation of Allied Irish Bank and Bank of Ireland is targeted at underscoring the stability of the sector and restoring credit flows. I remind the House that conditional on the capitalisation programme is improved access to credit for small and medium-sized enterprises and first-time buyers, as well as new safeguards for those homeowners facing difficulties at this time. Only this morning I launched, with a vice president of the European Investment Bank, a fund of €300 million available to Allied Irish Bank, Bank of Ireland and Ulster Bank to support small and medium-sized enterprises.

The forthcoming supplementary budget will expand on the plan the Government has been following in dealing with our economic difficulties. The restoration of order to the public finances, detailed adjustments to taxation and expenditure programmes and the continued development of Ireland's smart economy, the framework for which was published last December, will be central themes in the ongoing measures to revitalise the economy. This has been a useful debate which I have been following closely and which will inform the Government's deliberations in what is, by any standard, one of the most important budgetary announcements in many years. These are the building blocks which will move the country forward by enhancing our competitiveness and stabilising the budgetary framework. I look forward to giving full details to the House on 7 April.

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