Brian Lenihan Jnr (Dublin West, Fianna Fail)

I move amendment No. 1:

In page 6, lines 11 to 21, to delete subsection (1) and substitute the following:

"(1) If the Bank charges on the deposit protection account any payment out of the Bank's own funds in accordance with the Deposit Guarantee Regulations, the amount of the payment shall, with the approval of the Minister, be repaid to the Bank out of the Central Fund or the growing produce of that Fund within 3 months.".

The purpose of section 8 is to deal with a position where the Central Bank has indicated it is prepared to cover a shortfall with its own resources on a short-term basis where there are insufficient funds in the deposit protection account. It must be made clearer than was perhaps the case with the initial text that the Central Bank is not obliged or required to fund any shortfall that may arise in a deposit protection account. Under the rules of the European Central Bank, which has requested this amendment, the Central Bank cannot be obliged to fund any such shortfall as that would breach a prohibition on national central banks relating to monetary financing except in exceptional circumstances and on a strictly short-term basis.

The regulations will contain a provision permitting the Central Bank to fund a shortfall at its discretion, where the bank is of the opinion that it is in the interest of financial stability to do so. Where the Central Bank does provide funding, it must be reimbursed by the Exchequer. It is a technical amendment which is required by the European Central Bank.

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