Michael Creed (Cork North West, Fine Gael)
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Question 71: To ask the Minister for Finance his views on a need to establish a European Bank restructuring agency funded from the European Financial Stability Facility; and if he will make a statement on the matter. [18024/11]

Michael Noonan (Limerick City, Fine Gael)
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I am not aware of any proposals to use European Financial Stability Facility to establish a European Bank Restructuring Agency. The Euro Area Member States agreed in May 2010 to create a European Financial Stability Facility (EFSF) in order to financially support euro area Member States who are in difficulties caused by exceptional circumstances beyond their control. The EFSF was incorporated on 7 June 2010 for the purpose of providing stability support to euro area Member States in the form of guaranteed loans of up to EUR 440 billion within a limited period of time. There is currently no mechanism within the EFSF that could be used to establish such an agency.

The European Commission has been working to develop a proposal for an EU Framework for Bank Recovery and Resolution and has issued a number of consultation documents and communications on their proposed framework, most recently in January 2011. This consultation document set out three steps in the development of this framework. The first step is the development of a harmonised EU regime for crisis prevention and bank recovery and resolution - the Commission has indicated that it will publish a legislative proposal for such a regime in September 2011. This will include a common set of resolution tools and reinforcement of cooperation between national authorities in order to improve the effectiveness of the arrangements for dealing with the failure of cross border banks.

As a second step, the Commission has indicated it will examine the need for further harmonisation of bank insolvency regimes, with the aim of resolving and liquidating them under the same substantive and procedural rules, and will publish a report, accompanied if appropriate by a legislative proposal, by the end of 2012. Finally, the Commission considers that a third step should include the creation of an integrated resolution regime, possibly based on a single European Resolution Authority, by 2014.

Ireland supports the Commission's work to develop a proposal which gives national authorities a common resolution tool kit. We look forward to the publication of this legislative proposal in the autumn. From a domestic perspective the Central Bank and Credit Institutions (Resolution) (No. 2) Bill 2011 provides for a special resolution regime to allow the Central Bank to deal in an effective way with credit institutions that are failing or likely to fail in the future.