Finian McGrath (Dublin North Central, Independent)
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114. To ask the Minister for Finance the reason the European Central Bank programme of quantitative easing €1.1 trillion is being used to create further debt, instead of providing deficit easing across Ireland, and Europe; and if this process of quantitative easing displays the complete subjugation of the European Union to the sick debt-based money system, where money is printed to create debt; if this is the case, the reason money is not being printed to resolve debt; and if he will make a statement on the matter. [11018/15]

Michael Noonan (Limerick City, Fine Gael)
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The European Central Bank's mandate is price stability, which it defines as an annual rate of inflation close to, but below, 2 per cent. Inflation in the euro area has been below levels consistent with price stability for some time and, in fact, became negative last December and remained negative in January and February. The fall in inflation, combined with the fact that inflationary expectations have begun to drift downwards, pose a risk to price stability.

As a result, and with policy rates effectively at zero per cent, the ECB, on 9 March, launched an expanded asset purchase programme to include bonds issued by euro area central governments, agencies and European institutions. Under this expanded programme, the combined monthly purchases of public and private sector debt securities will amount to €60 billion. These monthly purchases are intended to be carried out from March 2015 until end-September 2016 and will, in any case, be conducted until inflation moves onto a path consistent with price stability.

The ECB does not have a mandate to reduce existing debts or deficits of the private or public sectors. In addition, monetary financing by the ECB of the public sector is prohibited under the Treaty on the Functioning of the European Union. By purchasing debt in the secondary market, however, the ECB can affect the cost of financing in the economy more broadly, and this will help towards achieving price stability.

In this regard, the Irish economy should benefit from the monetary stimulus through a number of channels which will create employment and reduce unemployment. For example, the economy should benefit directly through improved financing conditions for households and firms. In addition, the euro area is Ireland's single largest export destination; therefore, by supporting real economic activity and raising inflation in the euro area this will underpin the growth of Irish exports. Monetary policy also works through the exchange rate channel the depreciation of the euro will provide a further boost to Irish exports. 

So quantitative easing will be beneficial in terms of supporting economic recovery, thereby generating employment in Ireland and in the wider euro area. Living standards of euro area citizens will benefit accordingly.

An inflation rate which is consistent with price stability, and which is supported by appropriate fiscal policies and the implementation of the necessary structural reforms by Member States across the euro area, will facilitate economic recovery and the associated repair of public and private sector balance sheets.