Michael Noonan (Limerick City, Fine Gael)

The scenario to which the Deputy refers is a purely hypothetical one and I will not add to speculation in that regard. Indeed, I note that over the weekend there was clarification from Germany and France that they are not proposing any break-up of the euro area but rather are talking about making the euro area work better.

However, it is abundantly clear that we are at an important juncture. The intensification of the crisis since the announcement of a referendum in Greece and the subsequent increase in Italian borrowing costs are, of course, a matter of concern. While the situation is fluid, the recent political developments in both Italy and Greece are helpful in terms of easing the uncertainty that existed over the past week or so.

I wish to emphasise the considerable progress that has already been made in terms of improving the functioning of the EU and the euro area in particular. I refer to the EU semester; strengthened surveillance via the so-called "six-pack" of governance measures; support for vulnerable economies via the EFSF and the EFSM; a permanent crisis resolution mechanism in the form of the ESM; the Euro Plus Pact to inter alia improve competitiveness; and strengthened financial regulation.

These are all important developments and demonstrate that the EU can unite and work in the interests of all. This shows that the European Union can make significant decisions and progress which, not so long ago, would have been seen as almost unthinkable. I take great encouragement from this.

I refer to the comprehensive package announced by the euro area Heads of State and Government on 26 October. This is essentially a five-point strategy involving a credible solution to the Greek situation; boosting the effective capacity of the EFSF; recapitalising Europe's banks; enhancing surveillance; and improving economic governance in the euro area.

I wish to assure the House that work is continuing on implementing these important decisions. It is in all of our interests that we move forward as rapidly as possible in that regard.

Additional information not given on the floor of the House

Not surprisingly, some have suggested that greater surveillance and enhanced governance somehow implies an unacceptable loss of national sovereignty but I do not agree. The Government's view is clear; we are in a monetary union with other member states and therefore, more co-ordination of policies is essential. In fact, it must be recognised that the lack of co-ordination among member states in the past is one of the main reasons we find ourselves in the current predicament. It is, therefore, important to tackle the root causes of the problem. We simply cannot have a currency union without further integration and greater co-ordination. In these circumstances, putting in place, albeit retrospectively, the appropriate institutional architecture, is crucial.

Of course, enhanced policy surveillance and governance must be sufficiently balanced, and in this regard, the Government sees an important role for the Community-based method as it balances the interests of smaller member states. The Government also takes the view that as much as possible should be achieved at the level of the EU 27. However, it is also recognised that the level of integration and co-ordination will be necessarily higher for countries participating in a monetary union than for those outside it.

Finally, I wish to stress that the benefits of monetary union should not be forgotten. For instance, the deepening of trade and investment links between participating states has been of significant benefit, while consumers benefit from lower prices and ease of travel. In addition, we are receiving significant support from the ECB during our current economic difficulties.

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