Michael Noonan (Limerick City, Fine Gael)

The general approach on the pact for the euro is made up of measures to increase competitiveness, which are strongly endorsed by the German Government and have the support of all the AAA-rated countries in Europe, measures to promote greater economic growth and job creation and measures to have a sustainable public finance regime. There is nothing in place we cannot buy into immediately. The ways and means may be difficult but this is the way forward. The Deputy is correct about the new fund, the European stability mechanism, ESM. It will replace the European financial stability facility, EFSF, in due course but not until 2013. There were various discussions on how it would be funded. One can put in capital, there is callable capital and there are guarantees in the hierarchy. Of three options, the one which puts in the most capital upfront was the most acceptable because it gets a AAA-rating from the credit ratings agencies and is more likely to be sustainable.

I will send the Deputy a note on the cost to Ireland. I recall the figures represented to us were approximately €1.7 billion over four years, starting in 2013. However, if there is no drawdown from the fund - it is a contingency - Ireland will get dividends on the money. On the other hand if there is a drawdown, the equivalent will be paid back into the fund. Over the spread of the period involved it is not a heavy imposition from Ireland's point of view and it is important that the fund is in place.

The Deputy has a strong interest in these matters. Let us consider the issue overall. What happened was that Europe organised a common currency area but those involved did not put in place the architecture for protecting it at the time they initiated it. Effectively, they are retrofitting the architecture now. We have been unlucky because our crisis has occurred before the response mechanisms have been put in place. The new fund will be significant. As well as allocating money to euro countries in trouble, it will be able to buy sovereign bonds on the primary market. It also has a provision that received no coverage in the media, such that the Finance Ministers of the eurozone countries will be governors of the funds and they may alter the policy instruments of the fund as they see fit. It has the organic potential to put in place a great many tools or policy measures to protect the eurozone post-2013. This is one of the most significant developments that has taken place. If we had our crisis in 2015 or 2016, much of the architecture of the euro land would be in place. The crisis hit and when the architecture was tested it was insufficient and the policy instruments were not in place. They are now being retrofitted and Europe is chasing very hard to catch up. In this context, much progress has been made.

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