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Outright Monetary Transaction Scheme Eligibility

Dáil Éireann Debate, Tuesday - 23 April 2013

Tuesday, 23 April 2013

Questions (219)

Pearse Doherty

Question:

219. Deputy Pearse Doherty asked the Minister for Finance further to the European Central Bank press conference on 4 April 2013 in which the President of the ECB, Mr Mario Draghi, referred to OMTs and their precise rules, his views that the rules surrounding the criteria for access to the Outright Monetary Transaction scheme are precise; and if so, if he will confirm if the State meets the criteria for accessing funding under the OMT scheme at this time. [18474/13]

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Written answers

As I informed the Deputy previously (Parliamentary Questions of 12th February 2013, (No. 211) and of 21st February 2013, (Nos. 94 & 95) the Governing Council of the ECB made a decision to establish the Outright Monetary Transaction (OMT) scheme on 2nd August 2012, and issued a press statement on 6th September 2012 which outlined its technical features. According to this ECB Press Release, the purpose of OMT is: “Safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy”

This press statement sets out that a necessary condition for OMT is strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme. Such programmes can take the form of a full EFSF/ESM macroeconomic adjustment programme or a precautionary programme (Enhanced Conditions Credit Line), provided that they include the possibility of EFSF/ESM primary market purchases. The ECB have also stated that OMT may also be considered for Member States currently under a macroeconomic adjustment programme “when they will be regaining bond market access”. The ECB press statement also notes that the ECB’s Governing Council will decide on the start, continuation and suspension of OMT, following a thorough assessment, in full discretion and acting in accordance with its monetary policy mandate. The decision on whether to grant OMT or otherwise in any particular case is therefore a matter for the ECB.

I believe the ECB’s announcement regarding its OMT programme is a significant development and is viewed as such by the financial markets. I also note Mr Draghi’s comments that one of the reasons why the ECB’s OMT scheme is successful “was because governments made significant progress in undertaking both fiscal consolidation and, in some cases, structural reforms.”

We are now in the final year of our EU IMF programme and our focus is now firmly fixed on a successful and durable exit from the programme. The recent highly successful sale of long term bonds by NTMA is another very significant step in this process. We continue to assess a number of options in this regard. However, we must respect the fact that the decision on whether to grant OMT or otherwise in any particular case is a matter for the ECB, which is an independent body.

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