Brian Lenihan Jnr (Dublin West, Fianna Fail)

The latest Central Bank statistics, released on 1 February, show that Eurosystem borrowing by credit institutions resident in Ireland has fallen significantly from its highs of last summer. Borrowings at end December 2009 stand at €91.9 billion, down from the high of €130 billion in June 2009. These numbers reflect not just Irish headquartered banking groups but include subsidiary operations of international groups operating in Ireland. While the Central Bank publishes figures which cover all credit institutions operating in Ireland, including the IFSC credit institutions, it does not publish figures for individual institutions as these are highly market sensitive. The total aggregate balance sheet of all institutions is €1,306.9 billion, of which €91.9 billion represents ECB lending at end 2009, that is, 7% of aggregate assets.

Funding from the ECB is an important part of funding not just for covered institutions but for all credit institutions and was a common feature even before the recent turmoil in the markets. For example, in December 2006, €27 billion of the aggregate balance sheets of all credit institutions operating in Ireland represented ECB lending. It would be inappropriate for me to speculate upon or pre-empt the decisions of the ECB governing council concerning future funding decisions, but should it bring forward changes to funding policy this might be a good indication that wholesale funding markets are improving and returning to proper functioning.

The ECB has indicated publicly that it is engaging in the progressive, timely and gradual phasing out of the non-conventional measures which had been introduced in response to the financial crisis but that liquidity will remain abundant for months to come. As such, there are no negative implications in the medium term from the announced "phasing out" measures.

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