I propose to take Questions Nos. 120 to 122, inclusive, together.
The issue of Deposit Guarantee Schemes (DGS) has received extensive consideration and examination over recent times at EU level. The Commission carried out a first review in 2006 of the Deposit Guarantee Schemes Directive (Directive 94/19/EC). The subsequent Commission Communication on that review acknowledged that Member States had different approaches to deposit guarantee schemes reflecting distinct national circumstances and concluded that there was no consensus about what an ideal scheme would look like. The Commission proposed to focus on non-legislative actions in the short term while more fundamental issues would be postponed, in particular the coverage level, the scope and the funding arrangements.
In the wake of dislocation in global financial markets from mid-2007 onwards, the Ecofin Council of 9 October 2007 requested the Commission and the EU Financial Services Committee (FSC) to consider possible enhancements of the EU deposit guarantee scheme and to report back to the Council by mid-2008. Since then, discussions on DGS have taken place in the FSC, the EU Economic and Finance Committee (EFC) and at Ecofin. These discussions are ongoing and acknowledge the crucial role that DGS can play in maintaining confidence in the banking system. They also recognise that DGS are but one of the elements of the financial safety net. Views expressed by the ECB will be taken into account in the EU review.
Ireland is participating in the EU review of DGS launched by EU Finance Ministers last October. On the basis of the outcome of the EU review, I will, of course, consider any specific changes required in the Irish DGS to ensure that savers in Ireland benefit from safeguards in line with EU best practice.
The Irish DGS is based on a mix of ex ante and ex post funding mechanisms. As the Deputy indicated in his question, under the Irish DGS there is a levy of 0.2% on deposits, which has so far yielded a fund of some €450 million.
I would remind the Deputy that, as I have mentioned in response to previous similar questions, the first and most robust line of defence for depositors must be a well-managed system of prudential regulation and supervision so as to try to minimise the risk that a DGS needs to be activated. Recent assessments by bodies such as the IMF have confirmed that the Irish regime for financial regulation complies with best international practice.
Ireland has implemented Article 7(4) of the Deposit Guarantee Directive, in the manner described in footnote 7 on page 5 of the European Commission's Communication cited by the Deputy. The Irish Deposit Protection Scheme guarantees 90% of deposits up to a limit of €22,222, which means the maximum possible payout is €20,000. The Irish DGS is maintained by the Central Bank and Financial Services Authority of Ireland.