Joan Burton (Dublin West, Labour)

The European Central Bank embarked on a particular course on the euro. The euro has been of great value to Ireland and I do not believe Ireland should leave the euro even though others in this House have a different view. It should be noted that if Ireland left the euro all the mortgages would be restated in a new Irish currency and would therefore be heavily increased in cost almost immediately, which would be a nightmare for the people who have difficulties with their mortgages here. The ECB made a strategic decision, according to the Minister, that banks could get their funding at 1%, which is a very attractive rate. However, they were not doing that simply for Ireland but to ensure that the German, French, United Kingdom and other banks, which had lent recklessly and foolishly to reckless crazy banks in Ireland, eventually had to recognise the moral hazard principle applies to the European banks. This applied particularly to the Germans and the French who appear to have loaned without making any kind of check. We do not know the full story yet but they were pumping in money. People in Ireland will remember it was a British-based bank, Bank of Scotland Ireland, now gone, which set up business in this country with a new competitive regime of 100% mortgages, trackers and much discounted interest rates in order to gain market share.

In these negotiations we need to be tough. We have an enormous responsibility in regard to the faults of which this country is guilty, namely, the irresponsibility of our banks and the lack of supervision. However, the European banks and the ECB have some counterparty responsibilities for their system which was meant to regulate and curb wild behaviour by banks. The Minister should remember the 1% is, in effect, to facilitate the repayment, and thereby, the security of the European banks which lent recklessly and crazily to our crazy Irish banks.

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