Joan Burton (Dublin West, Labour)
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312. To ask the Minister for Finance if he will provide an update on the publication by the European Central Bank (ECB) of its December 2016 purchase of Irish Government debt revealing a decline in its bond purchases month on month and the expected tapering of ECB bond purchases; and if he will make a statement on the matter. [1650/17]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank of Ireland inform me that the actual monthly purchase volumes under the Asset Purchase Programmes (APP) respond to reflect seasonal fluctuations in market liquidity. The immediate run-up to year-end is a period of relatively low market activity and this is the primary reason for the reduction in purchases of all government bonds including Irish government bonds in December. 

In early December 2016, the Governing Council of the European Central Bank announced an extension of the APP but with a reduced overall volume of purchases from €80 billion to €60 billion per month. It also announced changes in some of the parameters within which the purchase programmes operate. The Central Bank of Ireland will manage the implementation of the APP as smoothly as possible, taking into account both the extension and the programme parameters.

The term 'tapering' is normally taken to refer to a gradual stepping down of purchase volumes to zero. It is important to clarify that the ECB's Governing Council has not indicated any tapering phase, merely an adjustment of purchase volumes.  Specifically, it has stated that the monthly pace of €60 billion will continue until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The Governing Council has also stated that if, in the meantime, the outlook becomes less favourable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, it intends to increase the programme in terms of size and/or duration. It is also important to note that the APP is a Eurosystem-wide purchase programme and its impact in any member state will be felt through a range of channels not just through the purchases of government bonds within the particular economy.