Central Bank Bill, 1969: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Last night I forgot to mention one point in connection with the man who in the strike previous to the last strike lost so much money over cheques which he had cashed and who was charged income tax by the Revenue Commissioners on the amount of money he had lost. The man charged the person involved and in court the judge's decision was that in the normal course of business you could cash up to £100 or £200 in order to help a customer but you could not act as a banker by cashing more. We would all agree that in normal times a retailer would not be keen to cash cheques of a greater value. However, during the bank strike the people were trying to keep the economy going—the Government allowed the strike to continue—and it was the retailers who kept the economy going. If they make a loss because of this the Revenue Commissioners still charge the traders income tax on foot of money never received. Another point is that three or four years ago it was normal for a person to get an overdraft for perhaps five, six or seven years but now the position has developed that you will only get an overdraft for a year or a year and a half and you have to go to a merchant banker to whom you will pay 2 per cent more. The Minister should get the banks to do what the American banks do, that is, loan money at a certain rate for a certain number of years, depending on your security, depending on the number of years for which you require it and also depending on what the proposition it. This would be a far better system than the present one where people have to pay 2 per cent more, which is creating inflation because if a person has to pay 2 per cent more he has to charge his customers to get that money back.

When the Government borrow money, as they have been borrowing, it means that there is less money for private enterprise, less money to be lent by the commercial banks, and if there is less money on the market a person must go to the merchant banks which, as I said, are more expensive. In regard to the point that 5 per cent of customers' lodgments must be deposited with the Central Bank this is quite a good idea from the point of view of the safety of the people's money but surely if 5 per cent is taken from the banks, money which they cannot use, this will lead to a higher rate of interest. Will they be getting interest rates from the Central Bank? The Minister mentioned that originally he thought that three directors should be appointed from the banks but that now he thinks two will be sufficient. There are five other directors to be appointed. Who will these be? Where will they come from? Will they be picked at random, or one from each profession, will they be from business groups or will they be nominees of the Minister from his own Department? I know there is one from his own Department but can there be any more? I am always frightened when a Government, and this party in particular, have a choice as in this case where the banks will put forward a panel from which the Minister can pick. The Minister might quite easily pick two friends of his or two men of his own party. The banks themselves as they know the people who worked with them over the years should appoint one, two or three directors, whatever it will be. I think it should be three or four. We accept this Bill in principle. The Minister is making certain amendments to it and I think on this side we will accept it practically in detail.

Mr. O'Donnell

It is desirable that Members of the Dáil should have an opportunity to discuss a subject which hitherto has been regarded as having an aura of mystique about it. While, perhaps, there are relatively few Deputies competent or expert enough to discuss banking and finance it is important that this topic should be discussed in Parliament. The changes contemplated in the Bill are long overdue. Many people who are interested in economic development, and this includes people who have been involved in industrial, agricultural and tourism development have, for a long time, been aware of the need for modernising and rationalising our banking system. As the Minister pointed out, this Bill will be the first major change in banking legislation since the Central Bank Act of 1942. This is an indictment of Government policy and of the economic and social thinking of the Government. A monetary policy is an integral part of an overall economic policy. It is important that the two should be co-ordinated. The Minister admitted this in his statutory speech and he went into detail about the relationship between monetary policy and economic development. This might appear to be a highly academic topic but it is a vitally important matter. Many people who have been involved in economic development have been aware of defects in our banking system.

In 1956 Fine Gael pinpointed certain necessary reforms. In the policy document of Fine Gael issued in 1965 it was stated that our party believed it was vitally necessary to bring about effective co-ordination between economic and monetary policies. They considered that alterations in the present framework of our banking system were necessary. They stated that if the policies suggested by Fine Gael were not adopted economic growth might well be impeded; if they were adopted economic development would be facilitated. I was a Member of the House at that time and I played a small part in the drafting of the original Just Society document.

It is a welcome change to find that the Government at this late stage have come to accept the idea that changes in our banking system are necessary. I recall that during the 1965 general election, when our clear-cut statements on the need for a reform of the banking system were made, there was much political controversy. The slogan used was "Hands off the banks"; it was stated we were going to nationalise the banks, and so on. I have studied the Minister's speech almost line by line with the 1965 Fine Gael policy document and I find that basically it is the same as our document. The only difference is that the Fine Gael policy document in relation to banking went much further than the Minister as regards analysing the entire banking structure. Fine Gael welcome this first piece of new banking legislation since 1942.

The Minister has outlined in detail the enormous growth of banking institutions in recent years. He pointed out that we have had an "open door" policy in relation to the establishment of banking and financial institutions. There is no doubt that from an economic development point of view the changes are necessary. It is also true that the mushroom growth of new banks makes it imperative that tighter controls should be imposed. In so far as changes are contemplated by the Minister regarding the laying down of new regulations for registration of new banks, these are desirable and necessary.

I have been astonished at the figures produced by the Minister in relation to the number of bankers' licences in force in this country; 70 such licences are currently in force. The cost of the licences will be increased and the amount to be deposited with the Central Bank will be increased also. These are necessary and desirable safeguards. I am not familiar with the actual mechanism in relation to the establishment of banks. The entire question of banking has come into the public arena in a dramatic way in the past six or eight months because of the bank strike or lock-out—whichever term one uses.

I understand that an examination of the entire banking set-up as regards staff relations and so forth, and also regarding the alternatives to the banking system which were utilised during the banks closure, is being carried out. This examination is being conducted by Professor Fogarty and I know that when he issues his report it will be of considerable interest. Knowing the calibre of this gentleman and his competence to undertake a report such as this I would predict that the report will come as a bombshell. This will be all to the good as it may serve to focus public opinion on the matter.

One of the big problems in relation to banking has been that it is regarded as a rather mysterious operation. Any discussion on banking or finance tends to become emotional. I hope that the changes now contemplated in this Bill and the publication of Professor Fogarty's report will lead to much better informed public opinion.

Various viewpoints have been expressed regarding the causes and consequences of the long close-down of the banks last year. I do not propose to go into the pros and cons of the matter; I merely express the hope that every effort will be made, and all reasonable precautions taken, to ensure that such a long close-down of our banking institutions will not occur again. I shudder to contemplate the consequences of another prolonged closure similar to the one we had recently.

We have reached a sad state of affairs when the banking institutions of this country, which are expected to be leaders not only in the matter of finance but also in other spheres of public life, should have had such an abominably bad record in staff relations—such a bad record in staff relations that in recent times there have been three periods during which the banks were closed down. The question of proper industrial relations is of paramount importance. Let me be quite blunt about this: the fact that this strike lasted so long is, first of all, an indictment of the staff relations system operated by the banks; and secondly, an indictment of the Government and particularly the Minister for Finance in that when it became apparent after five or six weeks that the bank strike would be prolonged, there was a bounden obligation on the Government, and particularly on the Minister for Finance, to intervene with a view to securing a speedy settlement of that dispute. I admit that that is a debatable point but I am convinced that the Government should have intervened.

In relation to the piece of legislation that is before the House, I hope it will achieve two main objectives: (1) that it will enable the banking system to play a more realistic part in all fields of national development, in agriculture, industry, tourism and so on; and (2) that the lesson has been learned and that the tragic consequences of the recent bank dispute will never be repeated in this country.

"Dispute" is a lot better than "strike" but I would prefer "lock-out", which in fact it was.

There was no strike. It was a lock-out.

Mr. O'Donnell

Whether it is a dispute or a lock-out makes no difference. We are on the side of the staff, as is Deputy Coughlan. Let me refer to it as a close down of the banks. That is the best way to get around it. There is an absolute need for the introduction of a proper staff relation system in the banks. I am glad to learn that some of the banks have already departed from the traditional mode of entry to the bank. We all know that the traditional mode of entry to the bank was the system of nomination. I do not intend to go into detail about the mechanics of having somebody nominated for the banks. It was an outrageous system and it was a total contradiction of the principle of equality of opportunity. There is no doubt that in relation to entry to the service of the bank some were "more equal" than others. Therefore I was very pleased to learn that one major banking group have advertised and are now aodpting an open competitive system. The Bank of Ireland Group, as far as I remember, operate a very modern scientific system of aptitude testing. The old ways seem to have gone.

Banking is a highly skilled and a highly technical business. If the Irish banking system is to progress and to meet the needs of the Irish economy, all aspects of banking will have to be modernised and the most modern techniques must be adopted. This applies particularly to the recruitment to the service of the banks. I am very hopeful that as a result of Professor Fogarty's examination of the recent bank dispute a new era of particularly good staff relations will emerge.

The Minister made a very important point when he referred to the widespread penetration of Irish banking by external interests. Apart from the general growth of banking institutions of all kinds, merchant banks, hire purchase companies and so on, a considerable number of foreign banks have set up branches here. The Minister has stated, and rightly so, that we are already over-banked. That is an original expression and I think it describes the situation very well. I agree with the Minister that in regard to the opening of new banks in the future there is need for caution. Perhaps it was a good thing that there has been a certain amount of development here by foreign banks. From the point of view of capital for industrial projects, tourist projects and so on, the foreign banks have been providing substantial capital but, as I said, future applications from foreign banks to establish branches here will have to be carefully considered, and I agree fully with the Minister about the need for caution.

The Minister also points out that if we become a member of the EEC our policy in relation to banking and so forth will have to take into account any obligations we might incur regarding participation by non-nationals.

There are a number of other aspects of this Bill with the details of which I am not competent to deal, but the Bill has been generally welcomed by this side of the House. I particularly, having been involved in the formulation of the Just Society document in 1969, could not but be struck by the similarities between the Minister's speech and that document. I sincerely hope that the objectives which the Minister has set out to achieve in this Bill will be realised.

The Minister made a very interesting point to which I had intended to refer at the outset in regard to the role of monetary policy in economic development. The Minister said:

There can be no question about the responsibility of the duly-elected Government for national economic policy of which monetary policy is an important and integral part.

The Minister then referred to the relationship between the Government and the Central Bank and the lines of communication and the liaison between the two. The intention is, as I understand it, that the Central Bank will be an autonomous body, that there will be close contact with the Minister and the Government and that there will be frequent meetings between the Governor and the representatives of the Central Bank and the Minister. This is very necessary. That is all I want to say on this Bill.

The debate on this Bill has ranged quite far and quite wide, as was to be expected in the case of a debate on a Bill of such wide scope and implications. One of the points raised, and raised repeatedly, is not directly relevant to the Bill, strictly speaking, I suppose, but may be by implication, that is, the long bank closure which we had, the causes of it and the messages to be got from it.

Perhaps I may be allowed to make a few comments in reply to what has been said about that. First, I should like to say again, and categorically, that the Government did not desire a continuation of this dispute for the reason that the absence of banking facilities might damp down inflation, or for any other reason. This allegation has been made from time to time and I should like to refute it categorically. In fact, during the closure in 1966, credit expanded and this experience alone provided a good reason for not relying on the bank closure last year to do the opposite.

We do not yet know precisely what happened in 1970 because the necessary details of statistical information have not come to hand. There are some preliminary indications that credit also expanded on this occasion. Those who claim that the Government took no action to settle this dispute appear to forget that there was negotiating machinery in operation over the many months of the dispute, trying to bring about a settlement and that, in fact, the settlement which was eventually effected came about through that negotiating machinery.

However, if the normal negotiating machinery which is provided for the settlement of disputes is to be set aside in one case, there is every likelihood that a similar solution will be sought in other cases, with the ultimate result that the normal machinery would simply disappear. Deputies on all sides of the House recognise that fact. If what they meant to say was that the implications of this dispute for the whole economy were so great that it was not to be regarded as a normal dispute, they should have said so, and they should have gone further when they did say that the Government should have stepped in, and should have spelled out what they had in mind that the Government should have done, having regard to the fact that for most of the time during the dispute, the machinery available through the Labour Court was in operation and that conciliation was actively in operation in this dispute.

What did they have in mind if the Government had stepped in? Is it that the Government should have stepped in and forced the banks to concede in full the claims made against them? If that is what anybody had in mind, I think he should have said so and accepted its implications. If that is not what was in mind, we are entitled to know what Deputies did think the Government should have done if we had swept the Labour Court aside and stepped in. What different approach should the Government have made in that regard? I do not think the implications of what has been said in this regard have been fully realised, or perhaps accepted, by some of the people who made these claims and these allegations. It has been said that the Minister for Education has stepped in in the teachers' dispute. However, this is really irrelevant. There is no comparison because the Minister for Education is one of the prime parties involved in that dispute.

At no time did I pretend that the long bank closure in 1970 did not give rise to hardship or inconvenience to the community. I am well aware of that hardship and that inconvenience. I am also aware of the valuable contribution made by shopkeepers, and traders, and businesses generally, by cashing cheques and providing other facilities for customers. Indeed, I am also aware of the valuable contribution made by the non-associated banks. I should like to thank them for it and to place our gratitude to them on record. However, I am sure that none of those people would object if I also say—and I do not mean this in any derogatory sense —that there was, of necessity, a measure of enlightened self-interest in their attitude during the closure.

A very important contribution was also made by the special arrangements which were introduced to maintain and increase the supply of currency, both notes and coin, in circulation. This involved action by all the Government Departments in conjunction with the Central Bank which played a key role in these arrangements. Incidentally, I think there has been some misunderstanding of these arrangements in some quarters, on the ground that it was felt that Government Departments, and those employed by them, were placed in a privileged position. It is true that wages and salaries were paid in cash in State Departments, but this cash circulated to pay, in turn, the wages and salaries of many others who would have been badly affected if this had not been done.

The arrangements also included provision for paying social welfare benefits and cashing pension warrants. In the case of the building industry special arrangements were made for payment in cash of the wages of workers employed on State and local authority building contracts where hardship would otherwise have resulted. Further, the number of post office remittance transactions increased enormously during the period of the dispute. Special arrangements were made to cope with the demand for the services and to facilitate those using them.

I do not think it would profit us very much at this point to continue turning over the dead leaves of a past dispute. Detailed inquiries into its causes and effects are at present in train, as I indicated when introducing the Second Stage. When the reports are available it will be possible to make a more informed approach to the whole subject. Our concern should be with the future because this is what really matters in this whole question of the banking system in this country.

As the dispute lasted for the greater part of 1970 and a vast accumulation of work arose it was only reasonable to expect that difficulties would arise when the banks reopened. I do not accept that thousands and thousands of persons and businesses have been pushed by the banks into a state of insolvency while they are, in fact, creditworthy, as has been implied by remarks made in this House during the course of the debate. This is a gross exaggeration.

Virtually all the cases of difficulty that have come to my notice have been cases of what I might call "credit holidays" where the persons concerned had exceeded the permitted limit of their overdrafts. The few cases which I have seen where the banks appeared to have acted rather harshly were settled satisfactorily on representations being made by the customer to the bank.

I am not in a position to comment on directives that some banks may have issued to their local managers. Any such directives would be private documents to which I would not have access. Nevertheless, as I have told the House before, the Banks Standing Committee had indicated to me that the banks are prepared to examine all bona fide cases of difficulty sympathetically on representations being made to them. I have no reason to suppose, whatever mistakes they may have made in the first instance, that they are not now doing so. Indeed, it would be very foolish of them not to do so because common sense would seem to dictate that it should be a first priority of the banks to win back and retain the goodwill of their customers. There are, in fact, many indications that matters are gradually returning to normal. Persons who awarded themselves extended credit during the closure cannot of course expect the situation to be allowed to continue indefinitely.

There seems to be some misapprehension regarding the purpose of Part III of the Bill which deals with bank mergers. I want to make it clear that there is no question of the ground being prepared by this Bill for the merger of the two big banking groups. The main purpose in view is to facilitate the separate internal integration of the Bank of Ireland and the Allied Irish Bank groups respectively. At present each of these groups consists of three separate banking companies. Each group has announced its intention to weld its constituent banks into a single bank and plans to this end are in train at present. The relevant provisions of the Bill are designed to protect the rights of staff and the rights of customers and to overcome the various legal and technical difficulties associated with these plans. I believe what is proposed will in time contribute to greater efficiency, to better use of resources and to better services to the public. Perhaps I might add that the Minister for Finance under the provisions of this Bill will not be obliged to approve any rationalisation or merger scheme if he sees objection on the grounds that a monopoly would be created or for any other reason.

Divergent views have been expressed here as to lack of competition, on the one hand, and excessive competition, on the other hand, between banks. There are two aspects of this: first, there is the question of a choice of banks being available. There is, I think, a not unreasonable choice of banks available to the public at present. Real competition, of course, involves more than a choice of banks for the customer. It is not intended that the Bill should restrict competition. In fact, the reverse is intended.

In relation to the clearing system, for example, the Bill contains provisions which are designed to place all banks on a similar footing and to prevent the emergence of practices which could defeat this. There is already considerable competition for business between the different groups of banks. Deputy Coughlan spoke about this and obviously he did not like the recent sample of competition which he had experienced, but I do not think he can deny that the banks did compete for business on that occasion.

The general commercial banks are also facing growing competition from other banks. Many new deposit-taking institutions and new savings media are now operating including, of course, the non-associated banks. I should like to make it clear that it is not my intention that the associated banks should be protected from fair and reasonable competition from the non-associated banks. A question would arise in my mind regarding extensive take-overs of Irish banking business by non-associated banks which are controlled from abroad and hence the note of warning which I sounded in my opening statement.

I should perhaps mention that a number of references have been made in regard to the associated banks and the question of the disclosure of their true profit and loss accounts and balance sheets in future in a form showing their actual profits and total reserves. As the House will know, the associated banks announced that they intended to do this at the end of 1970 but they had to postpone doing so because of the banks closure. It is now intended that the new arrangement will come into effect next year.

The question of Government borrowing was raised by Deputy O'Donovan and referred to by other Deputies. Deputy O'Donovan suggested that our recent borrowing operations were unsuccessful. In fact, the National Loans taken together, and this is how they should be looked at, raised a total of £45 million between new money and the re-investment of redemption money. This amount is the highest ever raised at one time and, given the upset caused by the long suspension of normal banking services, must be regarded as very satisfactory.

Deputy O'Donovan complained that the Government were taking too much of the credit resources of the country. He said that out of a total of £75 million available from the associated banks the Government were to get £50 million, leaving only £25 million available for everybody else. Whether the Deputy intended it or not this gave the impression that the Government were getting twice as much credit as all other sectors. The Deputy must know that this is not so. The £75 million, £50 million, and £25 million referred to relate to new or additional credit. The total amount of advances outstanding during 1969 in the case of the associated banks varied from £532 million to £613 million.

Was he correct about the new credit?

This was so, the £50 million as against £25 million, but to imply that this meant that the Government were taking that much of the credit was completely wrong because——

He was right in regard to the new credit.

I want to point out that the total amount of advances outstanding in 1969 varied from £532 million to £613 million while Government borrowing attributable to the associated banks did not exceed £167 million, or 27 per cent of the total at most. On the basis of the Central Bank guidelines the 1970 Exchequer proportions would not have been very different if the banks had been open. There have been a number of comments about foreign borrowing and, indeed, the whole operation of foreign borrowing has been called in question. Our policy in this regard has been outlined in the Third Programme and it is that external borrowing should be undertaken only to a limited extent to fill residual needs and only when it is advantageous to do so. This policy has been followed to date and it is the intention to continue to follow that policy.

The State Sponsored Bodies (Foreign Borrowing) Bill which has been circulated and it was referred to during the debate is fully subject to this policy. The Bill is a technical Bill designed to ensure that the various State-sponsored bodies will be able to borrow in a foreign currency if this should be necessary and within the limits of borrowing policy which I have indicated. The Government, of course, would prefer to fill all their needs from domestic sources and it is only when this is not feasible that recourse will be had to outside borrowing. The amount obtained from domestic sources could, of course, be increased by reducing the allocation of credit to the private sector but, as we have already heard, there is a complaint that too little is being left to that sector. Alternatively, the Exchequer needs could be reduced by cutting down on the public capital programme. It must be remembered that a very large part of the funds for that programme go to meet important investment requirements in agriculture, industry, tourism, transport, housing and schools and most people would be slow to recommend any drastic reduction in that kind of activity. Nevertheless, all proposals for capital expenditure are being subjected to a very close scrutiny with the aim of keeping the programme within reasonable bounds.

I am fully alive to the inflationary effects of foreign borrowing at present but I would point out that productive investment, in particular productive investment giving a continuing production of goods or services for sale abroad, is a counterbalance to these effects. In the inflationary situation in which we find ourselves it is clear that we cannot be generous in the allocation of credit as has been suggested, urged on us, indeed, by some Deputies, including Deputy Enright. We must keep a tight rein on credit, at the same time giving priority to requirements for the productive type of projects on which we must rely to increase our real incomes and help overcome the inflationary forces with which we are dealing at present.

Views which were quite conflicting and diametrically opposed were expressed by Deputies regarding the composition of the board of the Central Bank. On the one hand it has been suggested that there should be no representative of the commercial banks on the board and on the other that representation should be given to the non-associated banks which are not now represented. There is something to be said for both points of view. The Bill attempts to steer a middle course between them. It reduces the representation of the associated banks from three to two, proposing that the Minister for Finance should be enabled to appoint a further director. In making changes in the composition of the board it is necessary to move slowly. Long before the Central Bank was set up in 1943 the banking directors of the associated banks were giving service in their own banks and then when they were appointed to the Central Bank in 1943 they continued to give excellent service in the Central Bank as directors of that bank, as distinct from being directors of the associated banks, and no difficulty has arisen since 1943 in this regard or in regard to any conflict of interest.

I would not be disposed at this stage to go beyond what is proposed in the Bill. I appreciate the point regarding the representation of non-associated banks but there are difficulties attending the course advocated. First, there is an important principle involved in giving representation to externally controlled banks which might possibly be influenced more by their interests abroad than by their Irish interests. Secondly, there is a practical difficulty in that there is no one association representative of all the banks, although this might, perhaps, be got over as suggested by Deputy O'Higgins. While I have no final view on this subject as yet, it might be better if we adopted some other machinery under which all banks would have a ready means of making their views known to the Central Bank on matters affecting them.

There has been some comment about appointing the secretary of my Department as a member of the board of the Central Bank. This has been the custom for many years and it has worked well. Many urgent and important matters in the field of monetary policy come before the board from time to time and there is constant need for consultations between the governor and my Department which is responsible for advising me on general economic and fiscal policy. Monetary policy is bound up with these matters and it is necessary for me to be able to refer quickly to the board through some person who is familiar with all of these matters. I consider the present arrangement is satisfactory and that the appointment of some other persons to the board would not help the speedy dispatch of business.

There are a few other miscellaneous points which I should like to mention before I conclude. First, no cases of what I might call "shaky" financial institutions are known here. However, there have been such cases abroad, particularly in England. Provisions in the Bill are intended to guard against similar cases occurring here in the future, possibly in the case of firms controlled from abroad. I consider a policy of prevention is better than one of cure in an area such as this.

There have been suggestions that we should encourage in a more positive and active manner the introduction of foreign banks in this country. We must steer a careful course in this regard because too many foreign banks could involve effective foreign control over a large sector of the national savings——

If I might interrupt the Minister, in view of Common Market negotiations, can the Minister relate what he is saying now to what is likely to happen?

As the Deputy knows, this matter is not settled in the Common Market. Secondly, within the Common Market the situation is rather different. The banks coming in here at present are not operating within a controlled community like the Common Market and may perhaps be operating almost entirely on the basis of their head office requirements in a country outside the Community. A preponderance of foreign banks can also lead to an undesirable outflow of funds.

I think it was Deputy Donegan who raised a question about section 27, which he said prohibited banks from advertising for deposits. I do not blame the Deputy because when I read the section that is what I thought it said. However, I am assured it does not; what it is intended to say is that this prohibition applies to unlicensed banks. Nevertheless, I shall have a look at the wording to try to ensure that it is a little more clear.

With regard to the transfer of the Exchequer account from the Bank of Ireland to the Central Bank, a question was raised that no compensation is, in fact, being paid to the Bank of Ireland for the loss of this account. I was also requested to clarify the matter of the disability of the Bank of Ireland. Under its charter and an Act of 1929 there is some doubt as to whether the Bank of Ireland can engage in certain subsidiary banking activities carried on in other banks. There are also restrictions on voting by shareholders which do not apply under the Companies Act, and thus do not apply to other banks. We are putting the Bank of Ireland in the same position as any of the other associated banks. I should like to make it clear that it is not intended that the Central Bank shall engage in general commercial banking.

With reference to statements made by Deputy Coughlan, it should be self-evident that the banks closure did not bring about the close-down of the Hibernian Transport Company; it may have aggravated the position but it could not have caused the close-down. In regard to some of the statements made by Deputy Coughlan in this instance, he would probably be wiser to speak with a little more restraint because if what he says is true certain proceedings might well take place.

Failure to exercise restraint in referring to the matter in this House could well result in the failure of such proceedings, which, I think, is not Deputy Coughlan's objective.

If the Deputy was telling the truth, and I am sure he was, surely the facts should have been brought to the notice of the Minister.

I am not commenting on whether the Deputy was telling the truth. I am simply saying that on the basis of what he was saying I think it is easy enough to deduce what he would like to see done. By going a little too far he could well prevent the achievement of the objective which he would like to see achieved.

Deputy O'Donovan asked what was the meaning of "integrity of the currency". I would refer the Deputy to the report of the Central Bank of July, 1969 in which this question was discussed at some length. In regard to gold which the Deputy complains has been sold, I would point out that the value of gold would need to be doubled every seven or eight years to compensate for the loss of interest at 7 per cent per annum, which we are getting on some of the assets we converted from gold.

I was amazed to hear Deputy O'Donovan accuse the Central Bank of inadequate criticism of Government expenditure. Whatever criticism might be made of the Central Bank over the years—and there has been much— this accusation could not fairly be levelled against the Central Bank.

Despite the fact that there has been a degree of adverse criticism, I am glad that the Bill generally appears to be acceptable to the House. I welcome the constructive comments made and I assure the House that they will have my close attention and consideration. I should like to make it clear that the provisions in the Bill designed to protect depositors are not specifically directed against banks that are operating here at present. Rather are they a method of guarding against occurrences of the kind that happened in other countries.

I referred to some amendments I shall be bringing in at the next Stage. I think I made reference to the Supreme Court judgment in the marts case. I should like to make it quite clear that what is involved is not, as was implied during the debate, that these amendments are designed to circumvent the judgment of the Supreme Court in some way. In fact, the direct opposite is the case. The amendments recognise the judgment fully and the environment in which it was given. They are designed to ensure that banks which are being asked to comply with certain conditions will have a clear opportunity of making representations in regard to any difficulties which may be involved, if they wish to do so. They will also ensure that where the Central Bank proposes to impose a restriction on advertising by a bank it can do so in the interests of the proper regulation of banking. I have not dealt with all the points raised but I think many are more suitable for comment on the Committee Stage. No doubt we will get the opportunity of dealing with them, but I hope I have dealt with the major points raised in the debate at this stage.

Question put and agreed to.
Committee Stage ordered for Wednesday, 17th March, 1971.