Government Bonds

Dáil Éireann Debate, Thursday - 9 May 2013

Thursday, 9 May 2013

Questions (51)

Gerry Adams

Question:

51. Deputy Gerry Adams asked the Minister for Finance further to Parliamentary Question No. 157 of 30 April 2013, the reason the Central Bank of Ireland purchased the 2025 Irish government bond which was retained by Bank of Ireland; the reason this bond did not remain retained by Bank of Ireland; if he will explain if the Central Bank of Ireland is allowed purchase up to €3.1 billion of Irish government bonds and return the interest on these bonds to the Irish Exchequer; the reason the Central Bank of Ireland does not continue to engage in such practice for the foreseeable future in tranches of €3.1 billion of acquisitions per year; if he will explain how the Central Bank of Ireland purchasing rather than swapping as was the case with the promissory note restructuring of Irish government bonds from Bank of Ireland does not breach Article 123 of the Treaty on the Functioning of the European Union; if he will detail the way the Central Bank of Ireland financed this purchase and the available finance the Central Bank of Ireland has to conduct similar purchases of Irish government bonds on an annual basis of up to €3.1 billion in the future; and if he will make a statement on the matter. [21923/13]

Written answers

Minister for Finance

The Central Bank has confirmed that following the termination of IBRC’s market repo of the 5.4% Irish 2025 bond in the context of the special liquidation of IBRC, this particular bond was acquired by it. As the purchase was carried out on the secondary market, between the Central Bank and Bank of Ireland, the transaction did not breach Article 123 of the Treaty which contains a prohibition on primary market purchases only. The Central Bank has placed the bond in a special holding along with the other government bonds received in exchange for the Promissory Notes. While the Bank currently retains these bonds in this holding, it has indicated that it intends to sell them as soon as possible, provided conditions of financial stability permit. The Central Bank, in common with other National Central Banks of the Eurosystem, can hold financial assets only up to particular limits as part of agreements between the various members of the Eurosystem. The terms of such agreements and related issues are a matter for the Central Bank of Ireland and the ECB and not something that I can comment on. Other details in relation to the acquisition of the 2025 Irish government bond by the Central Bank of Ireland are matters for the Central Bank of Ireland.