Written answers
Wednesday, 4 July 2012
Department of Finance
European Stability Programmes
9:00 pm
Micheál Martin (Cork South Central, Fianna Fail)
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Question 57: To ask the Minister for Finance his views on whether Europe needs to move urgently to put in place a Eurozone wide bank resolution mechanism that does not require all residual costs to be borne by national governments; and if he will make a statement on the matter. [29364/12]
Micheál Martin (Cork South Central, Fianna Fail)
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Question 58: To ask the Minister for Finance his views on whether there needs to be a common deposit insurance scheme, common supervisory authority and bail in of senior bondholders across the Eurozone; and if he will make a statement on the matter. [29365/12]
Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 57 and 58 together.
The European Union, through various Directives and Regulations, currently provides for common rules to be applied by national supervisors. There is no single European supervisor although supervision is co-ordinated at a European level by the European Banking Authority. Supervision, deposit insurance and resolution are all national competencies.
The proposal for a banking union was first mooted by Commission President Barroso on 23 May. It has developed over the last number of weeks culminating in the paper on Economic and Monetary Union that was discussed at last week's European Council meeting.
One of the main proposals in the paper on Economic and Monetary Union relates to an integrated financial framework. It proposes that, building on the single rulebook, an integrated financial framework should have two central elements: [a] single European banking supervision and a common deposit insurance and resolution framework.
The European Commission will present proposals for a single supervisory mechanism shortly and these will be examined fully. A European deposit insurance scheme could introduce a European dimension to national deposit guarantee schemes for banks overseen by the European supervision. This would strengthen the credibility of the existing arrangements and serve as an important assurance that eligible deposits of all credit institutions are sufficiently insured. A European resolution scheme – with appropriate resolution tools, could provide assistance in the application of resolution measures to banks overseen by the European supervision with the aim of orderly winding-down non-viable institutions and thereby protect tax payer funds.
Of importance to Ireland is that these proposals are coherent and make a substantive contribution to strengthening the Eurozone's financial system. Ireland could support progress towards these objectives if the impacts were to ease the burden of support the sovereign has provided to the banking sector and shared responsibility for banking risks. It is also important that any proposal be applied retrospectively to the Irish bank recapitalisations. In this context I welcome the Euro area Summit Statement of 29 June which affirms the importance to break the vicious circle between banks and sovereigns and commits to further examine the situation of the Irish financial sector with a view to improving sustainability.
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