Dáil Éireann Debate, Tuesday - 17 April 2018
232. Deputy Pearse Doherty asked the Minister for Finance the projected Central Bank surplus for each of the next five years on the basis of the minimum required rate of sale of Government floating rate note bonds to avoid failure to comply with Article 123 of the EU Treaty; and if he will make a statement on the matter. [15297/18]
Amharc ar fhreagraThe ECB conducts an annual monitoring exercise to assess the compliance of national central banks (NCBs) with the prohibitions of monetary financing and privileged access referred to in Article 123 (and Article 124) of the Functioning of the European Union. Monetary financing prohibition includes the principle that NCBs must ensure that they do not finance obligations of the State vis-à-vis third parties. The ECB report classifies problematic cases in terms of ‘violations’ (which require specific follow-up measures) or ‘potential conflicts’ (which are not (yet) problematic but require further regular monitoring and should not serve as a precedent), while less clear-cut cases may be classed as ‘concerns’.
The 2016 ECB Report on Central Bank Compliance report noted that the information received by the ECB confirms that the provisions have generally been respected, although the report notes a number of cases which could raise concerns for the national central banks; in the case of the Central Bank of Ireland, this is in relation to the liquidation of the Irish Bank Resolution Corporation (IBRC).
As part of the liquidation of the IBRC in 2013, the Central Bank acquired a ‘Special Portfolio’, of additional assets to the value of approximately €42.6 billion, primarily in the form of eight long-dated Irish Government Floating Rate Notes amounting to €25 billion, and €13.7 billion NAMA bonds. The 2016 ECB report restated the opinion voiced in previous years, that the liquidation of the IBRC in 2013 raised “monetary financing concerns”.
Let me reiterate that the ECB defines less clear-cut cases as ‘concerns’; the liquidation of IBRC is not a violation.
The ECB Governing Council considers that the after-effects of the liquidation can be mitigated by the Central Bank’s disposal strategy for the Special Portfolio.
The Bank has indicated that it will sell a minimum of these securities to the following schedule: 2017-2018 (€0.5 billion per annum), 2019-2023 (€1 billion per annum), and 2024 on (€2 billion per annum until all bonds are sold). The actual sales have been well ahead of the stated schedule, as can be seen below:
|
Year |
Amount Sold € billion |
|
2014 |
0.5 |
|
2015 |
2.0 |
|
2016 |
3.0 |
|
2017 |
4.0 |
|
2018 |
1.0 |
|
Total |
10.5 |
The ECB report welcomed that disposals in 2016 were at a rate well above the minimum repayment schedule.
I am informed by the Central Bank that the position remains that it is committed to disposing of the Floating Rate Notes as soon as possible, provided financial stability conditions permit. As the Deputy is aware the Bank is statutorily independent therefore decisions around sales are a matter for the Bank itself.
The Floating Rate Notes originally amounted to €25.034 billion, this has been reduced to €14.534 billion as of 28 March 2018.
The Central Bank of Ireland does not publish its forecasts of surplus income. However, the Central Bank does provide forecasts to my Department from time to time to support Exchequer budgeting, given that the bulk of any surplus is returned to the Exchequer. These forecasts take account of all the Central Bank's activities.
