Brian Lenihan Jnr (Dublin West, Fianna Fail)

No, I do not accept that. Were it as simple as that, I would have been advised to do it by the Central Bank, my Department, the Financial Regulator and the National Treasury Management Agency. None of these advised me to take that action; all of them advised me not to take such action.

It is worth noting what has happened in the few weeks since I made the announcement on 30 September with regard to subordinated bondholders. As a result of this and although the Government has made it very clear that it does not apply to banks that are listed on the Stock Exchange, the markets have already read through this decision to the other Irish banks and have categorised their subordinated debt as junk in status. That does not affect the funding position of those banks at present since they are not in the market for subordinated debt and they have carried out substantial liability management exercises. However, it illustrates the dangers of this loose talk about bond default. It is clear that were the question of senior bond default to be even contemplated, it would have created a run on the banks and on the State's funding and a financial collapse for the country.

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