Brian Cowen (Laois-Offaly, Fianna Fail)

This was organised in such a way that no event of default arose - the bondholders were given a choice. The buy backs by the three largest banks have resulted in losses of almost €4 billion from face value for those bondholders and resulted in accounting gains for the financial institutions. That has increased their core capital putting them in a better position to absorb the discount which will arise when the loans are transferred to the asset management agency.

An important point I should make is that the bulk of bonds in issue by Irish banks are not subordinated debt but are debt of a far more fundamental character. They are often purchased by pension funds or insurers who are not natural high-risk takers. Another suggestion is that the Government could nationalise the banks and the financial system's problems would possibly disappear. This is patently untrue. Impaired assets still would have to be dealt with and the shareholders in AIB and Bank of Ireland would have to be compensated to the tune, perhaps, of more than €5 billion.

Deputy Burton stated yesterday that her party is not in favour of blanket nationalisation and I welcome that clarification. The Government favoured nationalisation where that was the best solution available at the time, as in the case of Anglo Irish Bank. Furthermore, we have repeatedly said that if the State needs to put further capital into the other banks, it will be done by way of equity, thereby increasing the State's holding.

The measures undertaken by EU Governments have been designed and implemented within a common EU framework. I have already referred to the undoubted benefits that membership of the eurozone has brought in tackling the current crisis, in particular the support to Irish financial institutions from the European Central Bank, ECB. The Government has also benefited from the template for impaired asset schemes drawn up by the EU Commission which will help to ensure that the NAMA provisions will be fully consistent with relevant state aid provisions of the treaty.

The Government is determined to ensure that the regulatory framework for financial services in Ireland meets the Government's objectives for the maintenance of the stability of the financial system, for effective and efficient supervision of the financial sector and for safeguarding the interests of consumers. Meeting this objective necessitates a new approach, involving new standards in banking regulation, new standards of corporate governance, and the integration of Central Bank responsibilities with the regulatory and supervisory functions.

The Government has agreed significant and comprehensive changes to the institutional structures for financial regulation which are consistent with the emerging international agenda for reform in the financial services sector. The key element of the new structure is the establishment of an independent central banking commission. The central banking commission will be chaired by the Governor and will be a single integrated structure combining the existing role of the Central Bank board with responsibility for the prudential supervision of financial institutions, which is currently the role of the Financial Regulator. The Government is determined that these structural changes will be supported with new resources, skill sets and expertise, that will underpin the restoration of confidence in our regulatory arrangements.

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