Michael McGrath (Cork South Central, Fianna Fail)
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Question 99: To ask the Minister for Finance if there is any evidence, documentary or otherwise, that, from the time of the negotiation of the EU / IMF deal last November to date, the European Central Bank has threatened to cut off or reduce its emergency liquidity funding to Irish banks in the event of the Irish Government proceeding to impose losses on unguaranteed senior bonds without the express support of the ECB; and if he will make a statement on the matter. [17184/11]

Michael Noonan (Limerick City, Fine Gael)
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At the outset I do not believe it is useful to characterise the intensive dialogue and engagement between the Irish authorities and its external partners, including the ECB, in the type of terms included in the Deputy's question. Inevitably the issues that we discuss with the troika relating to the design and implementation of the Programme of Financial Support are often complex and sometimes sensitive and difficult. However, notwithstanding the challenging nature of some of the negotiations we are involved in, we seek at all times to engage on a constructive and positive basis and that approach is reciprocated by the external parties. It is important to be clear that the very substantial liquidity support that we continue to receive from the Eurosystem has been crucial for the maintenance of the stability of our banking system and for allowing it to continue to meet the credit needs of the economy, businesses and households. It is also important to make the point that this funding is provided in accordance with the ECB's legal role, responsibility and mandate in respect of the eurozone.

The Deputy will recall that the ECB announced following the release of the results of the Central Bank's stress tests on the banks at the end of March that the basis on which it provides this funding - in other words how it regards and values the collateral it accepts - would not change even in the event of a downgrade by ratings agencies. This demonstrates the strong and positive commitment of the ECB to underpinning the funding position of the Irish banks.

As is well known the question of the scope for securing further burden sharing specifically and exclusively in respect of unguaranteed senior bonds in Anglo Irish Bank and Irish Nationwide Building Society has previously been the subject of discussions with the external authorities. I recently reiterated the Government's commitment to reviewing this matter afresh with the troika in view of the specific circumstances of those institutions and their future direction under the terms of the Programme agreement. However, I have also made very clear that no unilateral action is contemplated by Ireland and the issue can only be progressed on an agreed basis in the context of the ongoing review and assessment process with our partners on the Programme.