I propose to take Questions Nos. 52, 57, 58, 60 and 65 together.
At the outset, I want to stress that the formulation of monetary policy in the euro area both its design and implementation is a matter for the Eurosystem, which comprises the European Central Bank (ECB) and the nineteen National Central Banks of the participating Member States.
Under the Treaty, the Eurosystem is independent in the formulation of monetary policy, so I will not comment on the likely composition of asset purchases by the Irish Central Bank.
Price stability in the euro area has been defined as annual inflation of close to but not exceeding 2 per cent (inflation being measured by the Harmonised Index of Consumer Prices). Inflation in the euro area has been below levels consistent with price stability for some time and, in fact, moved into negative territory in December.
With policy rates effectively at zero per cent, the Governing Council of the ECB decided last week to expand its asset purchases to include inter alia sovereign bonds issued by the participating Member States in order to ease monetary and financial conditions further.
From an Irish perspective, the Central Bank of Ireland (CBI) is clearly part of the Eurosystem and will therefore be involved in implementing the monetary policy that has been decided upon.
The ECB has indicated that its asset purchase programme in relation to sovereign bonds will be restricted to bonds with a remaining maturity of greater than 2 but less than 30 years. It has also indicated limits on the Eurosystem's holdings of any one issuer's bonds, taking into account existing holdings. These limits refer to the same 2 to 30 year maturity window. To be precise, holdings within the 2 to 30 year remaining maturity window will not exceed 33 per cent of an issuer's tradeable bonds within the same window. The majority of the bonds acquired by the CBI in exchange for the Promissory Notes have more than 30 years remaining. Currently, this is the case for €19 billion out of the original €25 billion nominal issuance. Therefore, the holding of these bonds by the CBI will, in practice, have no impact on the amounts that can be purchased by the CBI. While other bonds within the 2-30 year maturity window that are already held by the CBI and other National Central Banks will be taken into account for the purposes of calculating the amounts that can be purchased, I understand that this still leaves ample room for participation by the CBI in the asset purchase programme.
I understand that the Bank's disposal strategy for its Special Portfolio - those bonds acquired following the liquidation of IBRC and the exchange of the Promissory Notes remains as previously announced, i.e. it will continue to dispose of the bonds as soon as possible, provided conditions of financial stability permit. Disposals may or may not impact on the purchasable amounts under the asset purchase programme depending on the maturity of the bonds sold.