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Separation of banking and sovereign debt not adequately addressed by Bill – Senator Reilly

21 October, 2014

Speaking today in the Seanad on the European Stability Mechanism (Amendment) Bill 2014 - Second Stage, Senator Kathryn Reilly said that the proposed Bill would not live up to the unfulfilled government promise of separating banking and sovereign debt.

Senator Reilly said:

“The Taoiseach and Tánaiste triumphantly claimed that banking and sovereign debt was to be separated in 2012. Sinn Fein welcomed the announcement cautiously. Over two years later we are still waiting.

“Sinn Féin put forward an amendment which would compel the Minister to apply for a retroactive recapitalisation this year. This amendment was brought forward during the Dáil debate on the European Stability Mechanism (ESM) Amendment Bill. The government as well as Fianna Fáil voted down this amendment.

“The Bill sets up a Direct Recapitalisation Instrument which permits some guidelines to be added to the ESM  Treaty. The legal status of those guidelines seemingly can’t be explained by any Minister. No one can claim the instrument lives up to the grand ambition of separating banking and sovereign debt. The total funds available are extremely small while the rules mean that the sovereign, the people, would still have to take a hit.

“Sinn Fein has kept retroactive recapitalisation on the agenda. However we are continually told that we have to wait until the Direct Recapitalisation Instrument is established before headway can be made on retroactive recapitalisation. Although it's to be established in a matter of weeks, the government can’t even commit to applying for retroactive recapitalisation.

“By ratifying this Bill without holding the government to account on its plan to secure recapitalisation, the Government will be let off the hook.

“Minister Noonan stated in the Dáil that some of the opponents of our recapitalisation have left their posts. But the obvious remains: the governments haven’t changed. Not one voice has come out in support despite letters from the Taoiseach and to EU leaders and Minister Noonan’s commitments that it is being raised at all appropriate levels.

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