As the Deputy will be aware, the Euro Area Summit Statement of 29th June affirmed that it is imperative that the vicious circle between banks and sovereigns be broken. In addition, the Eurogroup Statement of 9th July stated that in order to break the vicious circle between banks and sovereigns, technical discussions on the future ESM direct recapitalisation instrument will start in September. The statements represent a major shift in European policy in terms of breaking the vicious circle between the banks and the sovereign. This is something that the Irish Government has been saying is needed at a European level to help tackle the crisis. However, these statements represent an agreement in principle only. The policy statements provide a basis for a Euro-area solution to what is essentially a Euro-area problem but the details, structures and arrangements concerning how the solution will be achieved have yet to be finalised.
While detailed work is now underway it would not be appropriate to prejudge the outcome of the meeting of Eurogroup Finance Ministers of 9th July or any further discussions to take place between Eurogroup Finance Ministers in the coming months by making further statements beyond the principle that we are in favour of the separation of banking debt from sovereign debt and that we welcome the developments reflected in both the Euro Area Summit Statement of 29th June and the subsequent Eurogroup Statement of 9th July stating that it is imperative that the vicious circle between banks and sovereigns be broken.