Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Senator Conway-Walsh has pulled me up previously stating that I mistook what she said to me and I do not want to do that now. What I am trying to do is to give an explanation. This fund could potentially be a Brexit stability fund and perhaps the Senator will vote in favour of the Bill.

This fund could potentially be used for a banking crisis. It is open enough and we are not prescribing exactly what its usage will be but it is not intended for a banking bailout. I want to be very clear on that. Thankfully, we are post the banking crisis but when it happened we had no structures in place as to how we would recapitalise the banks except to provide funds directly from the sovereign. The work done in the past decade has been to break the link between the sovereign and the banks. I want to put on the record, and it is important to be clear on this, that a core objective of the EU banking union is to separate the sovereign from the banks and prevent the use of state funds to bail out banks. The existing structures have been in place for a number of years. The EU banking union provides for a single potential supervisor through the single supervisory mechanism, SSM, a single rule book and a single resolution mechanism. This aims to improve co-ordination and mitigate against negative spillover in the future. The banks in question, the major banks on the Continent that are part of the eurozone, are regulated not by the Central Bank of Ireland or individual central banks but by the European Central Bank. That is why we are breaking the link between the individual banks in individual jurisdictions and the reason they are regulated by the European Central Bank.

The bank recovery and resolution directive is designed to impose the cost of bank failures on the banks, their shareholders and the holders of their eligible liabilities - that is for a bail-in. That directive, which has been passed, is part of European and Irish law to ensure that we do not go back to the sovereign and that the era of doing so has ended.

Based on these and on the wider banking union changes and the more intrusive and assertive regulatory regime, I would not expect the national surplus reserve fund to be required to bail out banks. The regulatory landscape has been overhauled completely at national level since the crisis with the introduction of the Cental Bank Reform Act 2010, the Central Bank (Supervision and Enforcement) Act 2013. In addition, the Central bank of Ireland is acknowledged now as being one of the most robust and challenging institutions in Europe. The so-called light touch regulation is a thing of the past. The Central Bank of Ireland operates as an agent of the European Central Bank. These are the structures that are now European wide and European based to ensure that the era of bailing out a bank has ended and that the bailing-in happens through shareholders and the bondholders who invest in banks.

Senator Lawlor asked whether it possible to include the Seanad in terms of reports relating to the fund.It is not something that was put to us before and I will be looking at it.

In regard to the question of what happens if the Dáil is not sitting, we had this debate in the other Chamber. Some absolutely unforeseen catastrophe could befall the State and it may not be possible to recall the Dáil. For example, only 15 or 16 months ago there was a massive snowfall. If an event happens and it is not possible to reconvene the Dáil, the flexibility is there for the Minister to make a determination that there can be an allocation of funds, whatever that extreme event is. Subsequently, however, the Minister must present at the next Dáil sitting to explain the circumstances. We are putting in place this flexibility but we hope and anticipate it will never be used.

I touched upon the issue of the liquidity of the fund. The National Treasury Management Agency will be the custodian of the fund. It does a good job, better than most. I believe I have dealt with all of the issues.