Micheál Martin (Cork South Central, Fianna Fail)
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32. To ask the Minister for Finance the position regarding the EU response to date on Ireland's retrospective debt; and if he will make a statement on the matter. [35636/14]

Michael Noonan (Limerick City, Fine Gael)
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The Euro-area Heads of State or Government (HoSG) agreed in June 2012 that "it is imperative to break the vicious circle between banks and sovereigns." and that when a Single Supervisory Mechanism, involving the ECB, is in place and operational, the European Stability Mechanism, the ESM, could recapitalize banks directly.

On the 10^thof June 2014 the euro area Member States reached a preliminary agreement on the operational framework for the ESM's Direct Recapitalisation Instrument (DRI). This includes a specific provision in relation to the retroactive application of the instrument. Therefore, the agreement, that we were active in negotiating, keeps open the possibility to apply to the European Stability Mechanism for a retrospective direct recapitalisation of the Irish banks, should we wish to avail of it.

What is now required is a decision by mutual agreement of the ESM Board of Governors to create a new ESM instrument in accordance with Article 19 of the ESM treaty. The aim is to have this process completed as soon as possible, subject to completion of national approval procedures. For Ireland the European Stability Mechanism (Amendment) Act 2014 (No. 32 of 2014), which was enacted last week following signature by the President, fulfils this purpose. The Single Supervisory Mechanism is, as of yesterday, 4^thNovember, in place and operational. The latest available information is that the ESM Board of Governors will take a decision to implement the ESM DRI in early December.

In relation to retroactive recapitalisation, the draft guideline states that the potential application of the instrument for this purpose should be decided on a case-by-case basis and by mutual agreement. As I have stated previously, it will not be possible to make a formal application to the ESM for retroactive recapitalisation before the Instrument is in place.

However, I would remind the Deputy that unlike back in 2012, the ESM is no longer the only option open to us to recover the money provided to recapitalise our banks.  Investors are now willing to support Irish banks again and the market value of our investments has improved accordingly.

The decision on any application once the instrument is in place is a matter of timing. I believe that in Europe a strategic approach tends to deliver the best results, which is why I intend to keep the option of a retroactive recapitalisation firmly on the table.