The Government has approved proposals for draft legislation from the Minister for Finance, Mr Charlie McCreevy, to provide for the introduction mortgage and public credit bonds.
The Bill is designed to bring Ireland into line with practice in other European financial centres, to enable Irish lenders to finance their activities as efficiently as their European counterparts, and to further develop Irish capital markets.
Other European countries, notably Germany, France, Luxembourg and Denmark either have, or are in the process of introducing similar measures, in recognition of the efficiency of this type of funding and the creation of the euro single currency.
According to figures compiled by the EU Commission, these type of bonds account for nearly 20% of all euro denominated bond issuance, including sovereigns.
The bonds are a loan instrument which will, in practice, mainly be issued by banks.
The introduction of the euro and the new monetary policy framework has led to the development of an integrated and competitive money market in the euro area.