Pearse Doherty (Donegal South West, Sinn Fein)
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41. To ask the Minister for Finance the effect he believes quantitative easing will have on the Irish economy; and if he foresees Irish banks lending more to the real economy as a result. [13100/15]

Michael Noonan (Limerick City, Fine Gael)
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The Expanded Asset Purchase Programme (EAPP), launched on 9 March 2015, is aimed at fulfilling the ECB's price stability mandate. Asset purchases provide monetary stimulus to the economy in a context where key ECB interest rates are effectively at the lower bound. They should further ease monetary and financial conditions. They should also help to support investment and consumption, and ultimately contribute to a return of inflation rates which are close to 2 per cent.

This substantial additional easing of the monetary policy stance supports and reinforces the emergence of more favourable developments for the euro area economy. In an environment of improving business and consumer sentiment, the transmission of these measures to the real economy will strengthen, thus contributing to a further improvement in the outlook for economic growth and a reduction in economic slack. This will have positive implications for the Irish economy because the euro area is Ireland's largest trading partner.

In addition, the Irish economy should benefit from the monetary stimulus through a number of other channels which will create employment and reduce unemployment. Monetary policy works through the exchange rate channel and the depreciation of the euro will provide a further boost to Irish exports, as the majority of Irish exports are to outside the euro area. A more stable price environment, and notably the absence of deflationary pressures, will also make legacy debt less burdensome as the real debt burden becomes less onerous. 

Finally, by lowering real interest rates and by increasing liquidity the EAPP should lead to an easing of credit conditions and over time support increased bank lending to the real economy, both in Ireland and elsewhere in the euro area.