Brian Lenihan Jnr (Dublin West, Fianna Fail)

"That is why the government took great care not to make a formal application at this stage but to engage in intensive discussions to see exactly what the options are."

Let us be clear about what is happening at present. Officials from the various international organisations are here to engage in an intense process of consultation. I had good discussions with our European colleagues over the past few days, and I remind Deputies of the conclusions of the euro group: they welcomed the actions taken by the Irish Government on both budgetary matters and the banking situation, including the guarantee, NAMA and recapitalisation. We must have a clear and shared understanding of the facts. Furthermore, we are working on our consideration of the four-year plan, which will be made public very shortly. This will set out the difficult but necessary decisions we must take as a country to bring order and sustainability back to our public finances.

The main focus of the ongoing discussions will be on the banking system. I agree there are major issues in this regard, and our officials will, in the coming days, be working closely and intensively with officials from the European Commission, the ECB and the IMF. We are strongly committed to the success of the consultation process which has been agreed by the euro group in light of the serious market disturbances that have led to substantial increases in sovereign bond yields, particularly for Ireland but also for other eurozone member states. These developments not only jeopardise Ireland but threaten the integrity of the eurozone, so it is absolutely essential that the structural issues that underlie negative market sentiment and the loss of market confidence are dealt with in a detailed and comprehensive fashion.

Recent developments have inevitably led to a further escalation of the claim being made inside and outside the House that the bank guarantee of September 2008 had some connection with our present difficulties. Some commentators are blaming the ills of the country on the State guarantee. The fact is that every finance Minister in Europe indicated the other evening that the guarantee was the correct policy at the time. We have to work towards the future in order to stabilise the banking system in the dangerous market conditions that now exist.

In the period now extending over two years, no one has provided any compelling rationale for the superiority of any practical or feasible alternative to the guarantee adopted on 29 September 2008. My view, and that of the Government, on the basis of its assessment of the advice it received, remains that Ireland faced the likely collapse of its banking system within days in the absence of immediate decisive action. It is interesting that only yesterday we had another vote in the House about the extension of the guarantee to the end of next year. On that occasion the Opposition chose to divide the House on an issue about which the European Central Bank, the Commission and ourselves were unanimous - the need to stabilise the Irish banking system by giving a guarantee to protect confidence in it. Despite that unanimity of opinion from our international advisers and the Government-----

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