Seán Sherlock (Cork East, Labour)
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Question 120: To ask the Tánaiste and Minister for Finance when he last received a review on the operation of the deposit protection account maintained by the Central Bank for the purposes of the European Communities (Deposit Guarantee Schemes) Regulations 1995, S.I. No. 168 of 1995; the recommendations made as to its operation; if he is satisfied that the amount in the account is sufficient to meet potential liabilities; if he is considering changes to the level of contribution required from each credit institution at 0.2 % of deposits, the maximum 90% compensation limit or the maximum €20,000 compensation limit or any of these; and if he will make a statement on the matter. [14265/08]

Seán Sherlock (Cork East, Labour)
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Question 121: To ask the Tánaiste and Minister for Finance if the European Commission has discussed with his Department its view set out in a communication to the European Parliament (details supplied) that Directive 94/19/EC on deposit guarantee schemes requires that, if a member state decides that depositors should bear a certain percentage of losses themselves in the event their deposits become unavailable and therefore introduces a deposit protection scheme which imposes a limit on compensation equivalent to 90% of deposits, then the maximum compensation limit in that scheme must be set at €22,222; his views on the Commission's interpretation of the directive; the implications for the European Communities (Deposit Guarantee Schemes) Regulations 1995, S.I. No. 168 of 1995, which impose both a 90% limit and a maximum compensation limit of €20,000; and if he will make a statement on the matter. [14266/08]

Seán Sherlock (Cork East, Labour)
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Question 122: To ask the Tánaiste and Minister for Finance his response to the views of the president of the European Central Bank that deposit protection schemes that only partially cover smaller deposits will increase the risk of future bank runs and should be phased out; if, as a result he proposes changes to the European Communities (Deposit Guarantee Schemes) Regulations 1995, S.I. No. 168 of 1995, which impose both a 90% limit and a maximum compensation limit of €20,000; and if he will make a statement on the matter. [14267/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 120 to 122, inclusive, together.

The issue of Deposit Guarantee Schemes (DGS) has received extensive consideration and examination over recent times at EU level. The Commission carried out a first review in 2006 of the Deposit Guarantee Schemes Directive (Directive 94/19/EC). The subsequent Commission Communication on that review acknowledged that Member States had different approaches to deposit guarantee schemes reflecting distinct national circumstances and concluded that there was no consensus about what an ideal scheme would look like. The Commission proposed to focus on non-legislative actions in the short term while more fundamental issues would be postponed, in particular the coverage level, the scope and the funding arrangements.

In the wake of dislocation in global financial markets from mid-2007 onwards, the Ecofin Council of 9 October 2007 requested the Commission and the EU Financial Services Committee (FSC) to consider possible enhancements of the EU deposit guarantee scheme and to report back to the Council by mid-2008. Since then, discussions on DGS have taken place in the FSC, the EU Economic and Finance Committee (EFC) and at Ecofin. These discussions are ongoing and acknowledge the crucial role that DGS can play in maintaining confidence in the banking system. They also recognise that DGS are but one of the elements of the financial safety net. Views expressed by the ECB will be taken into account in the EU review.

Ireland is participating in the EU review of DGS launched by EU Finance Ministers last October. On the basis of the outcome of the EU review, I will, of course, consider any specific changes required in the Irish DGS to ensure that savers in Ireland benefit from safeguards in line with EU best practice.

The Irish DGS is based on a mix of ex ante and ex post funding mechanisms. As the Deputy indicated in his question, under the Irish DGS there is a levy of 0.2% on deposits, which has so far yielded a fund of some €450 million.

I would remind the Deputy that, as I have mentioned in response to previous similar questions, the first and most robust line of defence for depositors must be a well-managed system of prudential regulation and supervision so as to try to minimise the risk that a DGS needs to be activated. Recent assessments by bodies such as the IMF have confirmed that the Irish regime for financial regulation complies with best international practice.

Ireland has implemented Article 7(4) of the Deposit Guarantee Directive, in the manner described in footnote 7 on page 5 of the European Commission's Communication cited by the Deputy. The Irish Deposit Protection Scheme guarantees 90% of deposits up to a limit of €22,222, which means the maximum possible payout is €20,000. The Irish DGS is maintained by the Central Bank and Financial Services Authority of Ireland.