Thursday, 17 April 2014

Questions (82)

Michael McGrath


82. Deputy Michael McGrath asked the Minister for Finance if the ECB has expressed any unease to either the Central Bank of Ireland or his Department in respect of the deal last year to replace the promissory notes with long-term Government bonds; and if he will make a statement on the matter. [18499/14]

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Written answers (Question to Finance)

I am not aware of any expressions of unease made to the Department of Finance by the ECB following the promissory notes transaction. The Central Bank of Ireland is independent in the exercise of its functions and the management of its investment holdings is a matter for the bank itself and neither I nor the Department of Finance have any role in such a matter. Neither I nor my Department would, as a matter of course, be made aware of any discussions between the Central Bank of Ireland and the ECB in relation to this matter.

I am not concerned that the transactions accompanying the liquidation of IBRC, involving the exchange of Promissory Notes for Government bonds, are in breach of any Articles of the Treaty on the Functioning of the European Union. As the Deputy will be aware the transaction was unanimously noted by the ECB Governing Council, as indicated by President Draghi on 7 February 2013. Furthermore on 18 February President Draghi also stated that the promissory note deal was a positive step for Ireland.

The Irish Government fully understands the need for the ECB to ensure it is operating within its mandate as described in the recent Annual Report. As outlined by the Central Bank of Ireland on 7 of February 2013, the bonds will be placed in the Central Bank of Ireland's trading portfolio and sold as soon as possible, provided that conditions of financial stability permit. The disposal strategy will of course maintain full compliance with the Treaty prohibition on monetary financing. The promissory note exchange was a key transaction and can be seen as a major milestone on Ireland's road to recovery.