Chris Andrews (Dublin South East, Fianna Fail)

I welcome the opportunity to speak on this matter. Last September, the Government announced that it would increase the statutory limit for the deposit guarantee scheme for banks and building societies from €20,000 to €100,000 per depositor, per institution. Subsequent to the Minister's announcement, the European Commission issued a discussion document on updating the EU directive on deposit guarantee schemes. The European Council and European Parliament passed Directive 2009/14/EC. The changes made in this new directive are incorporated in the Financial Services (Deposit Guarantee Scheme) Bill 2009 and its associated regulations. This Bill will extend and modify cover to all credit institutions in the State and will cover depositors in banks not supported under the Credit Institutions (Financial Support) Act 2008.

The measures announced in the Bill will increase the deposit protection limit to €100,000 from €20,000; remove co-insurance in order that the total of deposits up to €100,000 are protected and not a fraction as in the previous scheme; reduce the minimum time period within which depositors must receive their guaranteed deposit from three months to 20 working days; move the responsibility of this area of financial regulation back to the Central Bank from the Financial Regulator; and extend the protection to depositors and shareholders of credit unions who were not covered in the previous scheme. That has been covered.

I commend the Minister for Finance, who acted very decisively last September on this matter, which was of great concern. Much speculation had been mounting among consumers that Irish bank deposits were not secure, with a number of people going so far as to withdraw their savings, with the consequent difficulties. People were discussing whether their money was safe in the banks. This would have undermined our entire economy. Allowing this to continue unaddressed would have had a serious effect on one or all of our banks, as without the liquidity of deposits banks simply could not function.

The steps taken by the Minister for Finance reassured the public and demonstrated the Government's commitment to ensuring a stable financial system. Measures taken since have shown that commitment. The Minister has acted assuredly and with great clarity. The guarantee offered by the State is among the highest in Europe - I understand only one other country offers a higher guarantee. As we are all aware, Ireland, with the rest of the world, has since found itself in the midst of the worst financial recession in more than 70 years. At national level the Government has taken necessary steps to stabilise the domestic banking system to ensure we have a healthy and sound banking system that meets the needs of the economy. The measures announced in the Bill represent just one of these steps. I note that previous speakers discussed NAMA. While the Opposition is working out the theory of how NAMA works, I have no doubt the Government will ensure NAMA works in practice.

Both at home and abroad changes are taking place in the financial sector in terms of regulatory approach, which is welcome. We need transparency and cannot be rigorous enough in ensuring we have such transparency. We also have improved international co-operation, risk management, etc. This will no doubt lead to a changed, but I hope far more stable and realistic financial sector. It is critical that the lessons of recent months are learned. The measures presented in the budget in April regarding the banking sector will, I am sure, rebuild confidence in our financial system, but it will not happen overnight. By steady management the measures announced in the Bill will assist in that process. I certainly support the Bill.

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