Dáil Éireann - Volume 687 - 08 July, 2009

Written Answers. - Banking Sector.

Deputy Seán Sherlock asked the Minister for Finance his views on the recent reiteration by the International Monetary Fund of its recommendation that temporary nationalisation of the Irish banks should be pursued in conjunction with the National Asset Management Agency in order to restructure the banking sector and to mitigate difficulties in appropriately pricing assets being transferred to NAMA; and if he will make a statement on the matter. [27975/09]

  Deputy Brian Lenihan: The IMF did not recommend nationalisation of the Irish banks. It did suggest that there can be circumstances in which a nationalisation is necessary. In this regard, the Deputy is aware of the nationalisation of Anglo Irish Bank, where circumstances were such that the Government believed a nationalisation was required.

The Government does not accept that nationalisation of the whole of the Irish banking system will be the short term panacea that some — but not the IMF — suggest. We believe [890] that it is important, where possible, that the banking sector has a market presence and that it operates within market disciplines and constraints. A commercially focused banking system operating within market disciplines and constraints is best equipped to achieve the Government’s aim of ensuring that the lending needs of the real economy are met.

I should note that the IMF Directors commended the response of the Irish authorities, welcomed the actions taken so far to safeguard financial stability and supported the NAMA initiative.