Dáil Éireann Debate, Tuesday - 31 January 2012
156 Deputy Richard Boyd Barrett asked the Minister for Finance his views on the ESRI report which predicts that the economic crisis may reach the scale of the 1930s Depression; and if he will make a statement on the matter. [38669/11]
Amharc ar fhreagraThe ESRI Quarterly Economic Commentary published in November suggested that there is a lack of coordinated action in the euro area and the situation contains elements reminiscent of policy making during the Great Depression. Since the start of the economic crisis, significant and bold policy actions have been undertaken by the ECB and by euro area Member States. As a result, an outright depression has been avoided.
The intensification of the eurozone sovereign debt crisis in recent months has called for additional action on our part and we have stepped up to this challenge. For example, the ECB is providing unlimited three year liquidity. The six pack of legislative reforms is another example. Moreover, as part of the intergovernmental agreement reached on Monday, euro area Member States have committed to a new "Fiscal Compact". This will lead to enhanced budgetary and economic coordination and governance. So progress is clearly being made.
157 Deputy Richard Boyd Barrett asked the Minister for Finance his views on whether only the ECB can be a firewall against financial panic; and if he will make a statement on the matter. [38670/11]
Amharc ar fhreagra166 Deputy Micheál Martin asked the Minister for Finance if the ECB will make radical choices to solve the euro crisis in order that international markets can regain confidence in our currency; and if he will make a statement on the matter. [38474/11]
Amharc ar fhreagra172 Deputy Micheál Martin asked the Minister for Finance his views on whether the ECB should have an extended role in its response to the euro currency crisis; and if he will make a statement on the matter. [1918/12]
Amharc ar fhreagraI propose to take Questions Nos. 157, 166 and 172 together.
The independence of the European Central Bank is enshrined in the Treaty and in this context it is important that this be respected when commenting on such matters. In terms of developments in recent months, I would highlight the key role that the ECB is already playing in addressing the crisis. For instance, it is important to note the positive impact of measures announced in December to support bank lending and liquidity in the euro area money market. In addition, secondary market purchases of the sovereign debt of vulnerable euro area Member States under the Securities Markets Programme have had a beneficial impact.
In terms of the wider question regarding the resolution of the euro area crisis, my view is that we are now seeing concerted action to address the weaknesses that have become evident in the design of monetary union. Retrofitting the single currency with the tools necessary to make it consistent with an economic union will be important in this regard. Considerable progress has been made, including the so-called "six-pack" of legislative reforms as well as the agreement on a "fiscal compact" to ensure fiscal discipline in participating Member States.
Secondly, we need to avoid difficulties in one Member State spreading to other Members States by erecting suitable financial firewalls. There has been some considerable progress in this area, including the development of stabilisation mechanisms that would have been unthinkable only two years ago.
