Brian Lenihan Jnr (Dublin West, Fianna Fail)

-----against the wishes of the European Central Bank. In any country in which such experiments have taken place, the central bank has stood behind the affected banks throughout the resolution of the resulting crisis. Those who think we could unilaterally renege on senior bondholders against the wishes of the ECB are living in fantasy land.

The idea that somehow there are no costs associated with default is entirely incorrect. This country is hugely dependent on foreign direct investment. These companies have large funds and investments in Ireland and, directly and indirectly, employ a quarter of a million people in this economy. Any default on senior debt and the uncertainty that would cause would undoubtedly have an impact on the future investment decisions of these companies. Subordinated debt bondholders are in a different position, and the legislation we will discuss later has a particular provision in this regard.

Of the €85 billion facility negotiated with the IMF and our European partners, €50 billion is to cover the financing of the State. The facility also includes up to €35 billion for support for the banking system - €10 billion for immediate recapitalisation, with the remaining €25 billion provided on a contingency basis. Deputy Noonan stated that the contingency amount was not sufficient. I must point out that the Central Bank's statement of 30 September 2010 on the prudential capital assessment review requirements for Irish banks estimated their capital requirements in view of all the elements of the banks' loan books, including the mortgage loan book.

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