Fergus O'Dowd (Louth, Fine Gael)
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Question 98: To ask the Tánaiste and Minister for Finance if he plans to improve the deposit protection scheme for savers in financial institutions here. [23615/07]

Joe Costello (Dublin Central, Labour)
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Question 122: To ask the Tánaiste and Minister for Finance the guarantees the State offers to depositors with banks and financial institutions; if he has plans to review the level of protection available in view of the recent crisis (details supplied); and if he will make a statement on the matter. [23672/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 98 and 122 together.

The Irish deposit protection scheme is based on the harmonised arrangements set out in the EU Deposit Guarantee Schemes Directive 94/19/EC. The Directive currently provides for a minimum level of protection of €20,000 or 90% of the loss incurred by a depositor when a credit institution cannot repay funds, whichever is the lesser. The Exchequer or the CBFSAI do not fund the scheme; it is funded by a levy of 0.2% on bank deposits.

Ireland participates in discussions in the EU relating to financial services regulation. In contributing to those discussions, important lessons are to be learned from recent developments in international financial markets. This process of review and examination is already under way. A key issue following recent events in the UK is the effectiveness of deposit protection arrangements across the EU. The European Commission has recently concluded a review of the Deposit Protection Schemes Directive which sets the framework for national schemes in the EU. It is necessary to look again at this work and in the light of recent developments to make sure that deposit guarantees strike the right balance between protecting depositors and making sure banks are not encouraged to take inappropriate risks.

In this context the Ecofin Council, at its meeting on 9 October last, decided on a preliminary set of issues to be analysed and addressed following the recent market turbulence. These include reviewing possible enhancements of the deposit guarantee schemes in the EU. This review is to be undertaken by the Commission and the EU's Financial Services Committee on which Ireland is represented. This review is to report by mid-2008. The work carried out on this review and its conclusions will be important inputs to the process of ensuring that arrangements to safeguard financial stability in Ireland continue to conform to international standards.

I think it is always well to remember that sound prudential supervision aimed at ensuring the continuing solvency and liquidity of banks provides the best protection for depositors. Ireland prides itself in matching best international practice in all aspects of financial regulation whether they involve international activities or domestic activities. According to the IMF itself, our regulatory regime is up to the best international standards. Additionally, the Governor of the Central Bank and Financial Services Authority of Ireland (CBFSAI) in a recent speech has indicated that Irish banks are solidly profitable and well-capitalised and, consequently, have good shock-absorption capacity to deal with risks emanating from the current period of uncertainty in financial markets. The CBFSAI is monitoring the domestic situation very closely, and is confident that Ireland is not exposed to the risks underlying recent disruption in financial markets.