Richard Bruton (Dublin North Central, Fine Gael)
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Question 4: To ask the Minister for Finance if he has had discussions with the banks or the Central Bank and the Irish Financial Services Regulatory Authority regarding the robustness of the Irish financial sector; and if he will make a statement on the matter. [31746/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Maintenance of the overall stability of the Irish financial system is a central priority of the Government. Since August 2007 the international financial system has been affected by unprecedented turmoil and dislocation. Credit markets, which are pivotal to meeting the medium-term funding needs of the financial system, have effectively closed since August 2007. Interbank lending rates for shorter maturities have increased significantly, raising the cost of finance to financial institutions. Difficulties created by impairments of sub-prime securities have adversely impacted on the European and US financial systems, as demonstrated by recent developments in the US. This has led to major uncertainty for the global financial system.

The prompt actions by international central banks, including the European Central Bank, to provide major injections of liquidity have contributed to greater stability in financial markets internationally, although they continue to remain subject to significant uncertainties. Agreement on the extensive and far-reaching plans announced recently by the US authorities should help to stabilise financial markets and rebuild confidence in the international financial system. Ireland, as a small, highly open economy with a significant financial sector closely integrated into the international financial system, cannot be immune from these developments. Therefore, the Government has been very active in supporting public confidence in the safety of deposits and the stability of the financial system overall. I welcome Deputy Bruton's support for my announcement on 20 September that the Government had decided to increase the statutory limit for the deposits guarantee scheme for banks and building societies from €20,000 to €100,000 per depositor per institution and that the cover will apply to 100% of each individual's deposit up to the €100,000 limit. This guarantee level, which will also apply to credit union savers, is now among the highest in the EU.

As I stated at the time, the Government is committed to the stability of our financial system, so that money placed with an Irish credit institution would not be at risk. The Irish Government wants to protect the whole financial system and secure its stability. As far as meetings with the parties referred to in the Deputy's question are concerned, this is a normal part of my role as Minister for Finance, given my responsibilities for the financial sector.

Richard Bruton (Dublin North Central, Fine Gael)
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I accept the Minister's expression of thanks for my support. I asked his predecessor for this 11 months ago so it is a little tardy in arriving.

Is the Minister confident he has all the necessary legal means to deal with an emergency such as the need for consolidation, as has been required in other jurisdictions, and that there would be no legal impediments such as regulations relating to competition? Is he confident he and the regulators in the Central Bank have a firm handle on the banks which have loans under intensive scrutiny? We need reassurance that the banks are taking necessary steps to secure extra capital if that is what is needed to meet the challenges arising out of those loans. Would he consider asking the Central Bank and the Financial Services Authority of Ireland to publish a financial stability report now, so that there will be an analytic basis for the confidence we all express in our financial system?

Will the Government call in the banks, as has happened in other jurisdictions, to ensure the needs of business are not unduly hampered by credit restrictions? We need a partnership approach involving Government, regulator and banks to make sure we emerge from this crisis in a robust state and able to support enterprise.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I agree with Deputy Bruton. We must have a partnership approach with the banks, the Central Bank and the Financial Regulator, the last two of which have statutory responsibilities in this area. The Deputy asked about the timing of the announcement on deposits but I have kept this matter under review since my appointment as Minister for Finance. It is very difficult to determine an appropriate date to make such an announcement but the close of banking business last weekend gave me an adequate opportunity to do so.

The Deputy asked questions on the stability of the financial system and I can confirm that the relevant emergency and contingency planning has taken place within my Department. In the unlikely event of any contingency being necessary my Department and I will be in a position to advise the Government on the appropriate steps to be taken. Deputy Bruton will be aware that the Central Bank and the Financial Regulator have distinct statutory responsibilities and the Joint Committee on Finance and the Public Service questioned the Governor of the Central Bank on the banking system during the course of the summer. Both the Governor of the Central Bank and the Financial Regulator are in regular discussion with my Department about the stability of the financial sector and maintain close surveillance and constant monitoring of it.

Liquidity, the availability of funds in banks and the extent to which the absence of those funds can impact on the economy are important matters which are raised periodically by Ministers for Finance with the relevant financial institutions. I do not want to go into details of the discussions I have held with those institutions but I share Deputy Bruton's concern that such issues should be high on the list of priorities at those meetings.

Richard Bruton (Dublin North Central, Fine Gael)
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Does the Minister agree it would be a good idea to publish a stability report to give us confidence? Does he agree it would be worthwhile to meet the banks to protect loan availability to vital areas of the economy in this period?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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A stability report might form one element of a package of measures to generate ongoing confidence in the sector but I would not like to commit myself this afternoon to the publication of a particular report. Any measures to boost confidence in this sector must be carefully thought out in consultation with all parties with a view to commending universal acceptance.