Joan Burton (Dublin West, Labour)
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Question 64: To ask the Minister for Finance the position regarding recent EU level meetings of European Ministers for Finance, and the relevant positions adopted by him in these discussions, in respect of economic and fiscal co-ordination within the EU and the eurozone, the establishment of a €750 billion stabilisation fund to support the eurozone, the regulation of hedge funds, private equity, and speculative financial transactions; if any such transfer would necessitate amending legislation; and if he will make a statement on the matter. [22420/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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President Van Rompuy's Task Force met for the first time last Friday. I am the Irish representative on the Task Force. The work of the Task Force has only just begun, but there is a willingness by all to consider ways to strengthen the Stability and Growth Pact, and to put in place an effective crisis management mechanism for dealing with the kind of problems we see today in the euro area. Ministers discussed these issues at last Friday's meeting and the general view was that all avenues for improvements that could be advanced quickly should be the focus.

As the Deputy is aware, the thrust of recent discussions in the Ecofin Council is to continue to make progress on a range of urgent and important issues in the economic and financial areas with a view to positioning the EU and euro areas to take advantage of economic recovery according as circumstances improve. Following on from the specific loan facility which has been put in place for Greece, the Ecofin Council decided on 9 May 2010 on a wider and comprehensive package of measures in order, if needed, to financially support Member States which find themselves in difficulties caused by exceptional circumstances beyond their control. The overriding purpose of these measures, which are supported by Ireland, is to safeguard financial stability in the EU and the euro area as a whole. This is vitally important for the EU, the euro area and for Ireland. The support measures consist of:

· The European Financial Stabilisation Mechanism based on a Council Regulation under Article 122 of the Treaty and providing up to € 60 billion in loans or credit lines which could be very rapidly mobilised. The Regulation setting up the Mechanism has already been enacted by the Council. Activation of the Mechanism will be subject to strong conditionality, in the context of a joint EU/IMF support. When a Council Decision is made to provide a loan or credit line to a Member State in difficulties, the Commission is empowered on behalf of the European Union to contract the necessary borrowings on the capital markets or with financial institutions.

· The European Financial Stability Facility, an intergovernmental agreement under which Euro Area Member States will provide guaranteed loans on a pro-rata basis of up to €440 billion. The Facility which will be set up shortly will provide loans of up to 5-year terms or credit lines via a special purpose vehicle (SPV). As I indicated last week in the course of debate on the Euro Area Loan Facility Bill 2010, which dealt with the position of Greece, further legislation will be required to allow us to participate in the wider financial support mechanism agreed by the Council.

In all cases the costs of each loan, including principal and interest repayment, will be the responsibility of the beneficiary member state. Financial assistance is in all cases to be subject to strong policy conditionality. The IMF have also committed to provide up to a maximum of €250 billion in loans to euro area Member States on a country by country basis, in the manner that the IMF recently agreed a package with the Greek Government.

The proposal for an Alternative Investment Fund Managers Directive is aimed at introducing, for the first time, an EU-wide regulatory regime for the managers of alternative funds, such as hedge funds and private equity funds. The proposal would introduce wide-ranging changes to the way in which the managers of these funds conduct their business.

The EU's Finance Ministers reached unanimous agreement on the proposal at the Ecofin meeting on 18 May. The agreed text will now form the basis for negotiations with the European Parliament. However, it was noted that, notwithstanding the unanimity achieved, many Member States still had a number of concerns which they wished to have resolved during the inter-institutional negotiations. In Ireland's case, we had concerns regarding the draft provisions on depositaries, valuators and in regard to the possible impact on venture capital funds and we would hope that the text that is finally agreed would address these concerns. The negotiations between the Council and the European Parliament on the draft Directive are expected to be completed before the end of July with a view to the new regime being in place during 2012.