Brian Lenihan Jnr (Dublin West, Fianna Fail)

Regarding the Central Bank and the issue raised by Senator Burke, liquidity in the Irish financial system is provided by the European Central Bank. It assures the liquidity of the Irish banking system. The Irish Central Bank has assets and liabilities but in general provides liquidity in an emergency rather than acting as a normal provider of liquidity in the system. That emergency liquidity would be provided on a short-term basis. That is the division of responsibilities between the European and Irish Central Banks.

Senator Burke and Senator O'Toole also raised the matter of the Financial Regulator. We in these Houses enacted legislation in 2003 providing for a regulatory system which was much lauded at the time as a model of its kind, based on principles-driven legislation and the idea that the Central Bank and the Financial Regulator were in the one building with the same front and back doors so that they could share and exchange information. As Minister for Finance during these difficult weeks, I found the degree of collaboration between the Financial Regulator and the Central Bank encouraging. The fact they are in a shared premises and have a shared legal entity is helpful.

Our difficulty relates to standards rather than legislation and the extent to which the Financial Regulator enforces standards in banks. If Senators want more extensive powers conferred on the Financial Regulator to restrict lending, that is something that can be examined. When legislation is enacted in these Houses on matters such as this, enthusiasm is not always expressed for that point of view. It is in a crisis such as this that we reflect on things and perhaps see there is merit in the case. I am willing to look at the issue of regulation when this is completed. While it is important to enact this legislation and implement it in terms of the schemes and arrangements with different banks and what the State looks for in value and performance, these being the most urgent matters, and while I am satisfied the regulator and his staff work very hard, we need to reflect on how to strengthen his position. There is always a balance in those matters.

Senator Buttimer referred to my accountability under the legislation. Section 6 provides for an annual report, the duration of the legislation is two years, I am accountable to Dáil Éireann in the performance of my functions, and the Committee on Finance and the Public Service can ask to see me on any matter they wish to enquire into.