Micheál Martin (Cork South Central, Fianna Fail)
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To ask the Minister for Finance if he has made an assessment on the wider implications of Irish banks being part of the European Stability Mechanism; and if he will make a statement on the matter. [47588/12]

Michael Noonan (Limerick City, Fine Gael)
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As you will be aware, the Euro Area Summit Statement of 29th June affirmed that it is imperative that the vicious circle between banks and sovereigns be broken. Work is continuing at a technical level to put in place both the single supervisory mechanism, and the European Stability Mechanism’s direct banking recapitalisation facility, at the earliest possible date. Ireland is participating constructively in these technical discussions.

The most recent European Council on 18/19 October 2012 concluded that:

“The Eurogroup will draw up the exact operational criteria that will guide direct bank recapitalisations by the European Stability Mechanism (ESM), in full respect of the 29 June 2012 euro area Summit statement. It is imperative to break the vicious circle between banks and sovereigns. When an effective single supervisory mechanism is established, involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalize banks directly.”

It is important from Ireland’s perspective, that progress towards these goals is made as quickly as possible, and as I have already mentioned we are playing our full part in this work.

The implications of any ESM participation in Irish banking recapitalisation are being considered as part of our overall approach to these discussions. However, at this stage it is not possible to form a definitive view on this matter.