Dara Murphy (Cork North Central, Fine Gael) | Oireachtas source

It was similar to a North Korean banking model.

The first part of the legislation brings about the possibility and encouragement of more possibility and more competition within the Irish banking system and that is to be welcomed. The second part concerns the European Stability Mechanism, ESM. There was commentary earlier about the European Central Bank, ECB, report issued this week and the concern that the promissory note deal of one year ago was to be renegotiated, as another Member suggested. We must be clear what was said in the ECB report. Last year, the ECB noted Ireland's promissory note deal and expressed some concern. Why is the ECB expressing concern? It is linked to the great fear the ECB has about monetary financing, which is quantitative easing. It seemed to suggest any slippage towards monetary financing will dilute the powers of the ECB. It says that the fact that we are making payments over the next 25 to 40 years mitigates their concerns. One of the flaws is that it does not accept a timeframe and, by accepting there is a timeframe for the issuance of bonds, it is tacitly accepting that we are not breaking any rules. It is a complete misnomer to suggest the best deal done by this Government, the promissory note, is unravelling. That is nonsense. The Ceann Comhairle would have been inundated with requests to discuss why we are paying up €3.1 million in March if we had to do so last year and this year. It would be the topic of the day had it not been for the renegotiation of the promissory note deal, which was an enormous success. Members of the Opposition, having not been able to have a debate about the €3.1 billion, are running around trying to find other fears to prey on.

One valid query is the difference between the ECB and the Federal Reserve in the United States. The reason the ECB is terrified of monetary financing or quantitative easing is because it is terrified of inflation. The only direct rule the ECB must concern itself with is inflation. In contrast, the Federal Reserve in the United States also has a mandate to look at inflation but must also consider unemployment levels. If unemployment levels go above 6% or 7% – I am not sure which – the Federal Reserve can step in and print more money to create vibrancy and growth in the economy. The ECB does not have that function. Looking at the stagnant levels of growth across the Continent over the past number of years, it is time the leaders of finance in Europe look at this difference between the two central banks. There are deep and technical arguments and some suggest there is a culture of fear of inflation, given our history. In light of the fact that, through the promissory note deal, we reduced the amount of money we would take out of the Exchequer and, consequently, we are one of the few countries experiencing growth, over the coming years the ECB should copy what is happening in Ireland rather than noting concern about it in a report. Ireland, in contrast to Europe, has had the growth all of us on the Continent need.

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