Banking Sector Regulation

Dáil Éireann Debate, Tuesday - 24 April 2012

Tuesday, 24 April 2012

Ceisteanna (115)

Shane Ross

Ceist:

207 Deputy Shane Ross asked the Minister for Finance in relation to the European Central Bank corresponding central bank model and procedures within the Euro system with respect to collaterisation, the legal instrument used by all Eurozone Central Banks in respect of non-marketable securities include the use of pledge and assignment and the fact that the Central Bank of Ireland is the only regulator in the Eurozone or in the UK, Sweden or Denmark, which has taken floating charges as security for liabilities arising, the reason for this disparity of treatment applied by the Central Bank here in comparison to banks regulated by other central banks in the Eurozone; if he will advise the value of current exposures that are secured by the floating charges registered against banks under the supervision of the Central Bank of Ireland; if he will provide a statement detailing the exposures of the Central Bank of Ireland to Irish banks when these floating charges were initially created in 2008. [19946/12]

Freagraí scríofa

Minister for Finance (Deputy Michael Noonan)

The Central Bank has informed me that Chapter 9 of the Central Bank's Documentation on Monetary Policy Instruments and Procedures (2012) contains the specific legal agreements that must be signed by counterparties who wish to conduct certain Eurosystem credit operations. These include Master Repurchase Agreement for marketable assets, the Framework Agreement for the use of Mortgage Backed Promissory Notes and associated schedules (including, in Schedule 5, a Deed of Charge), Deed of Floating Charge over Certain Loans, which must be signed when credit claims are used for collateral purposes and Deed of Floating Charge over Eligible Securities for Liabilities arising in TARGET2-Ireland. In accordance with the Treaty on the Functioning of the European Union and the Statute of the European System of Central Banks and of the European Central Bank, Eurosystem monetary policy is implemented in a decentralised manner. The Guideline of the European Central Bank of 20 September 2011 on monetary policy instruments and procedures of the Eurosystem (recast) (ECB/2011/14) provides that national central banks of the Eurosystem shall take all the appropriate measures to carry out the monetary policy operations in accordance with the principles, instruments, procedures and criteria specified in Annexes I and II to this Guideline. Subject to this requirement, each NCB in the euro area has discretion as to the form of legal instruments it uses for collateral mobilisation. The choices reflect specificities of national law in each Member State.

The Central Bank does not disclose details in relation to the collateral used by banks in Eurosystem operations and any details regarding any other lending carried out by the Bank are detailed in the Bank's Annual Report.