European Financial Stability Facility Bill 2010: Committee and Remaining Stages

Sections 1 to 8, inclusive, agreed to.
SCHEDULE
Question proposed: "That the Schedule be the Schedule to the Bill."

I have a number of questions for the Minister of State on the Schedule. In considering the Bill it is interesting to note that most of the material with the biggest impact is contained in the Schedule. I understand this is the nature of such legislation. However, I have a few questions that I wish to put to the Minister of State, to which I would appreciate a response.

The first pertains to section 1 of the Schedule on its entry into force which outlines that the framework agreement can only come into force following its ratification by at least five euro area member states, accounting for at least two thirds of the total guarantee commitments set out in the Bill. Does the Minister of State know the current status of the ratification process? Have enough countries ratified the agreement to enable it to come into force?

My next question pertains to section 4(6) of the Schedule which refers to the framework agreement's funding strategy. The Bill gives the organisation running the fund the ability to delegate responsibility for its operation to "one or more debt management agencies of euro-area member states or other such agencies or institutions" approved by the guarantors. This goes to a point Senator Hanafin has made many times in the House and on which he touched earlier. I am interested in hearing whether the debt management agencies will be publicly run ones, such as, for example, the National Treasury Management Agency here and its equivalent agencies across Europe, or if it would include private organisations such as banks which would then have an opportunity to make a profit out of the operation of the fund?

My next question relates to the latter part of the Bill.

I will let the Minister of State know when I find it. When a new member state enters the eurozone must it automatically join the fund or does it have the option to remain outside of it? New members of the eurozone would have the ability to take advantage of the fund in the future if they had to, which I hope they would not, but they would be able to immediately take advantage of the credibility the euro has gained through the setting up of the fund and therefore it would appear fair that any future member of the eurozone would have to become a member of the fund for it to be able to participate in the benefits.

Would the NTMA or an equivalent organisation play a role in where the ratification procedure stands at the moment across Europe and how would the fund operate in terms of new members of the eurozone? I refer to section 13(7). It outlines: "In the event that a new country becomes a euro-area Member State, the Parties hereto shall permit such new euro-area Member State to become a shareholder of EFSF by receiving a transfer of shares". It should be more than a case of permitting the new members to join us.

The first question relates to the ratification procedures. Essentially, when 90% of the guarantee commitments have been received the facility would be ready to issue guarantees if necessary. In terms of ratification, some countries have finished it and others will do so in the course of July. Austria has ratified. Belgium will not ratify before the end of July but that is due to elections there. Cyprus has ratified. The Finns are expected to ratify by the middle of July at the latest. France has ratified. Germany has ratified. Greece is a stepping-out guarantor. It will only be a guarantee, to use the terms of this debate. It will, in effect, be in place there by the morning of 6 July. Subject to completion of the Bill, the date here for ratification is 1 July. In Italy provisional approval has been given and final approval will be given later this month. Luxembourg has completed ratification. Malta is expected to ratify within the next six days. Portugal has completed ratification. Slovakia has had elections so that has disrupted its timetable. Ratification there will take place at the end of July at the earliest. Slovenia will ratify by the end of July. Spain will ratify on 5 July. In The Netherlands ratification depends on explicit approval of a supplementary budget that will be introduced today. That is the broad picture. The measure is, in effect, about to come into force.

Senator Donohoe's third question related to new euro-area member states. For the moment that is Estonia. I cannot recall when Croatia is due to become a member. It is due to become a member of the European Union next year but I do not think it will become a member of the eurozone next year. It is envisaged that joining the facility will be a condition of joining the euro. The language in section 13(7) uses the term "permit" but there is a clear understanding that new euro member states will join the facility as shareholders and guarantors.

Senator Donohoe also asked a question about funding strategy and the delegation to debt management offices. The reference to debt management offices specifically refers to the NTMA and its equivalents. The reference to "such other agencies" refers to the private sector but the clear intention is to use the public agencies.

Question put and agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

I thank Senators for their co-operation in the swift passage of the Bill, the importance of which was recognised by the House.

Question put and agreed to.