Legislation to allow Ireland to take part in European Union-led rescue package for Greece may come before the Dáil as early as next week, Brian Cowen has said.
The Taoiseach today insisted the €750 billion plan, forged by Euro zone governments at the weekend, had had “the intended effect” in terms of dampening speculation around the stability of the euro and its bond markets.
The Department of Finance has already begun to prepare legislation to allow Ireland to contribute its share of the aid package, which is 1.1 per cent or €4.8 billion.
“The bottom line is that speculation will occur where a weakness is identified. Beyond the Greek situation, there was a bet being taken as to whether the euro was in a good enough position to survive,” he told the Dáil.
“Clearly we faced the prospect of entering into a second episode of the financial crisis where the relative indebtedness of states was being put in question. We have to show solidarity for the stability of the currency,” he said.
The Government would not hold a budget before December, the Taoiseach also confirmed.
“With revenues coming in on stream and with spending down 10 per cent over the first quarter compared to last year and being on target it is not envisaged that we would have any requirement for a budget other than at the end of the year, thankfully,” he said.
Mr Cowen admitted governments had failed to put in place adequate regulations for the governance of hedge funds, which many have blamed for the rampant market speculation in recent months.
“There was a mistaken view in terms of governance of these sort of instruments in the past and that’s why we ended up in the situation we’re in,” Mr Cowen said.
“Clearly we have to find an improved regulatory system not just of financial institutions but in terms of financial instruments as well.”
He said the Government would be open “to joining a consensus” that would see Europe providing for an improved regulatory regime.
European markets staged their biggest rally in more than 17 months yesterday after EU policy-makers unveiled its rescue package.
The euro rose as much as 3 per cent to almost $1.31 against the US dollar after weeks that saw confidence draining from the currency, although it did shed some of its gains later in the day to finish at just under $1.28.
The ECB said it would counter "severe tensions" in certain markets by purchasing government and private debt, and restarting a dollar-swap line with the Federal Reserve.