Róisín Shortall (Dublin North West, Labour)
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Question 90: To ask the Minister for Finance the exposure by domestic credit institutions to the Central Bank and to the European Central Bank; if he is concerned that such exposure is comparable to total national income; and if he will make a statement on the matter. [1388/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I refer the Deputy to the money and banking statistics published by the Irish Central Bank on a monthly basis. The figure for borrowing from the Eurosystem relating to monetary policy operations for the domestic group of credit institutions (listed at - http://www.centralbank.ie/data/site/cmbs/Credit%20Institutions%20Resident%20in%20the%20Republic%20of%20Ireland.pdf) at the end of November stood at E97.319bn. As is the case for other Central Banks comprising part of the Eurosystem, the Central Bank of Ireland can provide other liquidity facilities to credit institutions where that is judged necessary. The 'other assets' figure included in the Financial Statement of the Central Bank primarily relates to this lending and at end of November the 'other assets' figure stood at E44.674bn. I do not believe that the comparison suggested by the Deputy is appropriate given, for example, the secured and fully collateralised nature of lending by the Eurosystem with appropriate haircuts applied under detailed rules set by the ECB.

As the Deputy is aware, the programme agreed with the EU/IMF provides for a recapitalisation, fundamental downsizing, restructuring and reorganisation of the banking sector. The outcome will lead to a smaller banking system more proportionate to the size of the economy, capitalised to the highest international standards with renewed access to normal market sources of funding. This will enable the Irish financial institutions to reduce their reliance on Eurosystem and Central Bank funding mechanisms and focus the banking system on strongly supporting the recovery of the economy.