Michael Noonan (Limerick City, Fine Gael)

I thank Deputy Donnelly for his contribution and questions. He made an interesting speech on Second Stage, to which I did not refer in my closing remarks because he was not present.

On burden sharing in respect of unguaranteed bonds in Anglo Irish Bank, I was relating to the House the advice I had received. Without quoting Mr. Trichet, I was giving the burden of his advice to the House because they were the reasons set out. What happened in Greece is not yet finished. As I understand the position, the country needs to achieve something akin to a 90% willingness rate among the relevant financial institutions before private sector involvement, PSI, is invoked. The last I heard, the relevant figure stood at between 75% and 80%. Deputies should remember, however, that this is a voluntary arrangement and I am being asked to push a coercive arrangement. Greece did not go that far. The effects in Greece would have been manageable if the measure had been confined to Greece and provided it achieved the ratios it had planned. The difficulty is that when the markets examined the Italian position and, to some extent, the position of Spain, they concluded that something similar would be done in these countries. There was, therefore, a direct contagion effect.

Ireland is in circumstances where since mid-summer the value on the secondary market of the unguaranteed senior bonds in Anglo Irish Bank has been moving towards par. Values have moved up to 85%, 86% and 87% and are now in excess of 90%. There is an expectation that this tranche will be redeemed at par. If we were to get involved in a voluntary exercise along the lines of what was done in Greece, we would hardly get €100 million out of it. That is what this issue comes down to. The judgment question is whether Ireland would risk reputation for such a sum. As Deputy Donnelly is aware, as a small programme country, it is very hard to explain the details of what one is doing and get one's message across. All that would happen is that Bloomberg would run a line under its bulletin stating Ireland had imposed haircuts on senior bondholders. In such circumstances, it would be very hard to get Jack back into the box, which has been my experience previously. It is very hard to nuance what one is doing when one comes from a country of Ireland's weight which receives very little attention. That is the response to the Deputy's first question in so far as I can answer it.

The Deputy's second question was whether I consider the action being taken in Europe to be adequate. It is clearly inadequate and evidence is emerging all the time to support this view. I can, however, understand the problems in Europe. The introduction of a single currency 12 years ago was a good idea and, as I noted in my reply on Second Stage, it has major advantages. The value of the euro has increased. Having started out at €1.22 to the dollar, it now stands at approximately €1.37 to the dollar, despite all the pain and suffering of the past fortnight. Ten days ago it stood at €1.44 to the dollar.

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