Michael Noonan (Limerick City, Fine Gael)

All I am saying is that it has gone up in value.

The euro also controlled inflation which in the past 12 years has averaged 1.97% per annum. Inflation was higher than this under the Deutsche Mark in the 12 years previously. The single currency has, therefore, been a great success in controlling inflation. European trade has also increased by 50% in the 12 years since the introduction of the euro, a development from which Ireland has benefited greatly.

Just two weeks ago, when Switzerland decided that the value of the Swiss franc was rising too fast and damaging the country's exporting capacity, it decided to peg the franc to the euro, rather than the dollar, gold standard or yen. The Swiss made a shrewd judgment that the euro was a strong currency and a good one to peg their currency to. The problem is that when the euro was introduced, the authorities did not, despite the proven advantages of doing so, fit the policy instruments to defend it in times of adversity. This is being done retrospectively and in instalments. The problem is that we have never got ahead of the curve and bigger initiatives than those taken thus far are needed. I advocate this all the time. As I did not want to offend anyone in the larger countries when they were dead set against eurobonds, I simply changed the language and stated we were seeking mutual guarantees. The Deputy is aware that eurobonds and mutual guarantees amount to the same thing, although the language differs.

On quantitative easing, I can see the problems the European Central Bank in Frankfurt would have with such an approach because its primary mandate is to protect the value of the currency and keep inflation low. That is its mission statement. If one pumps significant sums into the economy by printing money, which is the effect of quantitative easing, one needs to measure the results to ensure there are no inflationary effects. I assumed buying bonds on the secondary market was a distant cousin of quantitative easing, but this is denied in Frankfurt which argues that there are balances elsewhere in the system and one does not increase money supply by buying bonds on the secondary market.

Quantitative easing has been used successfully in the United States and - also successfully I believe - in the United Kingdom, although an inflation problem is emerging there where the inflation rate has reached 5%. This is a very high rate both comparatively and in absolute terms. This is a judgment for the European Central Bank to make, but I will put the issue in this way. If a decision were taken in Frankfurt to engage in quantitative easing, I would not jump up and down and say it was wrong. That is my position on the matter.

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