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  • Irish Times Article: ‘Citizens left out of plans for EU reform’ – Thomas Pringle TD
    along with the International Monetary Fund that bailed out Greece Ireland and Portugal This seemingly harmless amendment represents a very significant U turn on the part of the EU on the very nature of the union itself because embedded in previous treaties is a total ban on bailouts subject to very rare exceptions Article 125 of the Treaty on the Functioning of the European Union states The Union shall not be liable for or assume the commitments of central governments regional local or other public authorities other bodies governed by public law or public undertakings of any Member State A Member State shall not be liable or assume the commitments of central governments regional local or other public authorities other bodies governed by public law or public undertakings of another Member State The exceptions are contained in article 122 2 which states when a member state is in difficulties caused by natural disasters or exceptional circumstances beyond its control the European Council may grant financial assistance It is obvious from the tenor of the relevant articles that bailouts by the union itself or member states were not to be tolerated except in very unusual conditions There is a second significance to this very crucial amendment to the treaties Article 3 on the Treaty on the Functioning of the European Union states quite categorically The Union shall have exclusive competence in the following areas Monetary policy for Member States whose currency is the Euro This December 2010 proposed amendment to the treaties will permit other agencies to have competence in the area of monetary policy Both these changes represented a major change to the nature of the EU and the question arises should such fundamental changes have been done through the simplified or through the ordinary procedure which would have involved a convention composed of representatives of national parliaments members of the European Parliament and of the European Commission and heads of government This would have been followed by a conference of representatives of the governments of member states The simplified procedure is not permitted where the proposed amendment is to increase the competence of the EU but it is by no means clear the ordinary procedure involving an extensive consultative process can be dispensed with even where issues of an extension of competences does not arise It isn t that there was any urgency about this change for this happened well over a year ago and the establishment of the ESM is not to happen officially until the beginning of 2013 The haste suggests an endemic indifference among the movers and shakers of the EU towards democratic procedures which they find tiresome An argument has been advanced by Gavin Barrett of the UCD law faculty that the amendment to article 136 was not necessary for the establishment of the ESM While I respect his expertise in this area it seems difficult to see how an extension of competence in the area of monetary policy to agencies outside the ambit of

    Original URL path: http://www.thomaspringle.ie/2012/05/23/irish-times-article-citizens-left-out-of-plans-for-eu-reform/ (2016-02-16)
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  • Irish Times Article: ‘Independent TD takes legal action over ‘far-reaching’ effects of referendum’ – Thomas Pringle TD
    treaty in relation to the European Stability Mechanism ESM and to change an existing treaty on the functioning of the EU itself without putting these matters to a vote Mr Pringle contends the Government s plans to ratify the treaty establishing the ESM and approve the related amendment to article 136 of the treaty for the functioning of the EU are unlawful He claims both these measures breach the Constitution and EU law While the TD s court action will not affect the holding of the referendum he says if the court finds the ESM treaty is unlawful there will be a question over the validity of any Yes vote in this month s referendum In court yesterday John Rogers SC for Mr Pringle said both sides had agreed on a timetable for an expedited hearing The case which is expected to last five days was fixed for hearing on June 19th Mr Rogers told Mr Justice Roderick Murphy the High Court may find it necessary to make a reference of an issue to the European Court of Justice The case will be mentioned before the court again on June 6th Mr Pringle wants the court to consider whether the ESM treaty is in breach of existing EU principles which have been approved in previous referendums He also wants the court to examine the legality of an amendment to an existing treaty which he says will be pushed through without a vote if the May 31st referendum is passed That matter relates to amendment of article 136 of the treaty on the functioning of the European Union and Mr Pringle argues the court should look at this amendment before any further action is taken by Government to approve it Be Sociable Share Previous Story Thomas Pringle v Government of Ireland

    Original URL path: http://www.thomaspringle.ie/2012/05/22/irish-times-article-independent-td-takes-legal-action-over-far-reaching-effects-of-referendum/ (2016-02-16)
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  • Follow Thomas – Thomas Pringle TD - Page 42
    Open publication Free publishing More ballybofey Thomas meets with Coeliac Society of Ireland I received a petition from the Coeliac Society of Ireland yesterday outside Leinster House against the Deutsche Welle German Article Irish MP The ESM is destroying the EU Ireland is taking its challenge of the European Stability Mechanism to the highest authority Unlike People s News Latest Issue Open publication Free publishing More constitution Thomas meets with Connacht Ulster Alliance I was delighted to meet with the Connacht Ulster Alliance in Dublin this week Letterkenny Institute of Technology Watch Thomas speak at Leaders Questions Speaking to the Taoiseach on 19th September regarding cuts to children s mental health services watch Thomas speaking People s News News Digest of the People s Movement Open publication Free publishing More austerity New Europe ESM German Constitutional Court Passing the hat onto Ireland ARTICLE SEPTEMBER 12 2012 11 52AM The German Constitutional Court has not deemed it necessary to block Donegal Daily post TD S ANGER AS 7M SPENT COLLECTING HOUSEHOLD CHARGE Thomas Pringle TD has today condemned that over 7m in household charges paid by property owners is Speaking Up Reaching Out I was delighted to meet with the Speaking Up Reaching Out group last month It was a Page 42 of 50 First Previous 38 39 40 41 42 43 44 45 46 Next Last Contact Info Killybegs Constituency Office Connolly House Bridge Street Killybegs Co Donegal 074 97 41880 thomas pringle oir ie Latest News Look out for my General Election 2016 newsletter February 11 2016 12 59 pm DONEGAL NOW Donegal TD reveals Minister Lynch will not meet with Save Our St Joseph s Campaign February 11 2016 11 24 am DONEGAL NOW Calls on Burton to provide additional funding for community services programmes February 11 2016

    Original URL path: http://www.thomaspringle.ie/category/events/page/42/ (2016-02-16)
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  • Follow Thomas – Thomas Pringle TD - Page 43
    give up on the gynaecology ward at Letterkenny The Thomas Pringle ESM EU Case C 370 12 has been prioritised by the EU Court of Justice There is a principle within the EU that if an issue is before the ECJ that could CAO Offers Leaving Cert Helpline Congratulations to everyone getting their CAO offers today I wish you all the best of luck But Deputy Pringle speaks to RTE News on Household Charge link to local cuts disputed Independent TD Thomas Pringle has claimed the Government is using non payment of the Household Charge to justify Irish Times Court seeks submission from Pringle over ESM objections The Irish Times Wednesday August 15 2012 MARY MINIHAN INDEPENDENT TD Thomas Pringle has said the European People s News News Digest of the People s Movement Open publication Free publishing More cjeu Financial Times German lawsuit challenges rescue fund Open publication Free publishing More ecj Donegal Daily Posts Deputy Thomas Pringle Condemns Staycation Camper Van Theft as MEAN DONEGAL South West TD Thomas Pringle has described thieves behind the robbery of a camper van earlier Thomas attends the Blessing of the Fleet in Killybegs The Blessing of the Fleet and Mass in the Auction Hall took place on Saturday the Pringle Welcomes Supreme Court referral to ECJ Independent TD Thomas Pringle has said he is extremely pleased that the Supreme Court has today decided Page 43 of 50 First Previous 39 40 41 42 43 44 45 46 47 Next Last Contact Info Killybegs Constituency Office Connolly House Bridge Street Killybegs Co Donegal 074 97 41880 thomas pringle oir ie Latest News Look out for my General Election 2016 newsletter February 11 2016 12 59 pm DONEGAL NOW Donegal TD reveals Minister Lynch will not meet with Save Our St Joseph s

    Original URL path: http://www.thomaspringle.ie/category/events/page/43/ (2016-02-16)
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  • Follow Thomas – Thomas Pringle TD - Page 44
    is Total votes taken Irish Times Supreme Court to hear ESM appeal on Monday MARY CAROLAN A SEVEN JUDGE Supreme Court will hear the appeal next Monday by Independent TD Thomas Pringle High Court Update Delivery of Judgement The full judgement on my High Court case is due tomorrow 17th July at 2pm by Shopfloor article Truth Behind the European Crisis See below my contribution to this month s Shopfloor the Mandate Trade Union newspaper Three times in Irish Times Ratification of ESM pact on hold for appeal The Irish Times Wednesday July 11 2012 MARY CAROLAN THE GOVERNMENT has undertaken not to ratify SUSI How to apply for a student grant Not sure how to apply for a student grant This short video explains all Pringle V Government of Ireland and Attorney General Judgement See below the decision on my High Court case by Justice Mary Laffoy made on July 9th Irish Times High Court to refer ESM issue to European court A High Court judge has found Independent TD Thomas Pringle has raised a legal issue to be High Court Judgement Update Update Judgement in my challenge to the ESM and Article 136 amendment will be Save Our National Schools protest 4th July Dublin With the Education Amendment Protection of Schools Bill 2012 due to be debated in the Dáil this Page 44 of 50 First Previous 40 41 42 43 44 45 46 47 48 Next Last Contact Info Killybegs Constituency Office Connolly House Bridge Street Killybegs Co Donegal 074 97 41880 thomas pringle oir ie Latest News Look out for my General Election 2016 newsletter February 11 2016 12 59 pm DONEGAL NOW Donegal TD reveals Minister Lynch will not meet with Save Our St Joseph s Campaign February 11 2016 11 24 am DONEGAL NOW

    Original URL path: http://www.thomaspringle.ie/category/events/page/44/ (2016-02-16)
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  • Thomas Pringle v Government of Ireland – Thomas Pringle TD
    on market expectations and thereby lower average and marginal funding costs for those Member States currently facing funding pressures However for any such effect to be durable a roadmap towards common bonds would have to be accompanied by parallel commitments to stronger economic governance which would guarantee that the necessary budgetary and structural adjustment to assure sustainability of public financeswould be undertaken Reinforcing financial stability in the euro area Stability Bonds would make the euro area financial system more resilient to futureadverse shocks and so reinforce financial stability Stability Bonds would provide all participating Member States with more secure access to refinancing preventing a sudden lossof market access due to unwarranted risk aversion and or herd behaviour among investors Accordingly Stability Bonds would help to smooth market volatility and reduce or eliminatethe need for costly support and rescue measures for Member States temporarily excludedfrom market financing The positive effects of such bonds are dependent on managing the potential disincentives for fiscal discipline This aspect will be discussed more thoroughly inSection 1 3 and Section 3 The euro area banking system would benefit from the availability of Stability Bonds Banks typically hold large amounts of sovereign bonds as low risk low volatility and liquidinvestments Sovereign bonds also serve as liquidity buffers because they can be sold atrelatively stable prices or can be used as collateral in refinancing operations However asignificant home bias is evident in banks holdings of sovereign debt creating an importantlink between their balance sheets and the balance sheet of the domestic sovereign If the fiscal position of the domestic sovereign deteriorates substantially the quality of available collateralto the domestic banking system is inevitably compromised thereby exposing banks torefinancing risk both in the interbank market and in accessing Eurosystem facilities StabilityBonds would provide a source of more robust collateral for all banks in the euro area reducing their vulnerability to deteriorating credit ratings of individual Member States Similarly other institutional investors e g life insurance companies and pension funds which tend to hold a relatively high share of domestic sovereign bonds would benefit from amore homogenous and robust asset in the form of a Stability Bond Facilitating transmission of monetary policy Stability Bonds would facilitate the transmission of euro area monetary policy Thesovereign debt crisis has impaired the transmission channel of monetary policy asgovernment bond yields have diverged sharply in highly volatile markets In some extremecases the functioning of markets has been impaired and the ECB has intervened via theSecurities Market Programme Stability Bonds would create a larger pool of safe and liquidassets This would help in ensuring that the monetary conditions set by the ECB would passsmoothly and consistently through the sovereign bond market to the borrowing costs of enterprises and households and ultimately into aggregate demand Improving market efficiency Stability Bonds would promote efficiency in the euro area sovereign bond market and inthe broader euro area financial system Stability Bond issuance would offer the possibilityof a large and highly liquid market with a single benchmark yield in contrast to the currentsituation of many country specific benchmarks The liquidity and high credit quality of theStability Bond market would deliver low benchmark yields reflecting correspondingly low credit risk and liquidity premiums see Box 1 A single set of risk free Stability Bond benchmark yields across the maturity spectrum would help to develop the bond market more broadly stimulating issuance by non sovereign issuers e g corporations municipalities andfinancial firms The availability of a liquid euro area benchmark would also facilitate thefunctioning of many euro denominated derivatives markets The introduction of StabilityBonds could be a further catalyst in integrating European securities settlement in parallelwith the planned introduction of the ECB s Target2 Securities T2S pan European commonsettlement platform and possible further regulatory action at EU level In these various ways the introduction of Stability Bonds could lead to lower financing costs for both the publicsector and the private sector in the euro area and thereby underpin the longer term growth potential of the economy Box 1 The expected yield of Stability Bonds the empirical support The introduction of Stability Bonds should enhance liquidity in euro area government bond markets thereby reducing the liquidity premium investors implicitly charge for holding government bonds This box presents an attempt to quantify how large the cost savings through a lower liquidity premiumcould be A second component of the expected yield on Stability Bonds namely the likely credit risk premium has proven more controversial Both the liquidity and credit premiums for a Stability Bondwould crucially depend on the options chosen for the design and guarantee structure of such bonds Several empirical analyses compared the yield of hypothetical commonly issued bonds with theaverage yield of existing bonds These analyses assume that there is neither a decline in the liquidity premium nor any enhancement in the credit risk by the common issuance beyond the average of theratings of Member States Carstensen 2011 estimated that the yield on common Bonds if simply aweighted average of interest rates of Member States would be 2 percentage points above the German10 year Bund Another estimate Assmann Boysen Hogrefe 2011 as cited by Frankfurter Allgemeine Zeitung 2011 concluded that the yield difference to German bunds could be 0 5 to 0 6of a percentage point The underlying reasoning is that fiscal variables are key determinants of sovereign bond spreads In fiscal terms the euro area aggregate would be comparable to France therefore the yield on common bonds would be broadly equal to that on French bonds An analysis byJ P Morgan 2011 using a comparable approach yields a similar range of around 0 5 to 0 6 of a percentage point A further analysis along these lines by the French bank NATIXIS 2011 suggeststhat common bonds could be priced about 20 basis points above currently AAA rated bonds Faveroand Missale 2010 claim that US yields adjusted for the exchange rate premium are a good benchmark for yields on common bonds because such bonds would aim to make the euro area bondmarkets similar to the US market in terms of credit risk and liquidity They find that in the years before the financial crisis the yield disadvantage of German over US government bonds was around 40 basis points which would then represent the liquidity gains obtained from issuing common bondsunder the same conditions as US bonds In order to provide an estimate of the attainable gains in the liquidity premium the Commission hasconducted a statistical analysis of each issuance of sovereign bonds in the euro area after 1999 Thesize of the issuance is used as an approximation as it is the most broadly available indicator even if itmight underestimate the potential gain in liquidity premia of how liquid a bond issuance is and thecoefficient in a regression determines the attainable gains from issuing bonds in higher volumes 8 The issuance sizes as recorded in Dealogic have been adjusted to incorporate the size of adjacentissuances with similar maturity and settlement date To adjust for differences in time dependent marketconditions control variables are introduced for the impact of the level of the interest rate the 2 year swaprate and of the term structure the difference between the 10 year and the 2 year swap rates prevailing at A first model is estimated using data on AAA rated euro area Member States labelled AAA in thetable and a second model is estimated using data on all available euro area Member States labelled AA The second model also controls for the rating of each issuance It emerges that all coefficientsare significant at conventional levels and between 70 and 80 of the variation is explained by theestimation Table Model estimates and expected change in yield due to lower liquidity premium DEAAAAADEAAAAAYield model based3 683 633 871 922 432 63Yield change with US market size 0 07 0 09 0 17 0 07 0 17 0 17 Historical average 1999 20112011 market conditions To obtain the gain in the liquidity premium the coefficients from the model estimate were used tosimulate the potential fall in yields of bonds that were issued in the average US issuance size rather than the average euro area issuance volume Hence the US s issuance size serves as a proxy for howliquid a Stability Bond market might become In a first set of calculation the liquidity advantage wasderived from the average historical portfolio yield since 1999 For comparison the samecalculations were made assuming the market conditions of summer 2011 The table s second row indicates that the yield gain due to higher issuing volume would be in the rangeof 10 to 20 basis points for the euro area depending on the credit rating achieved but rather independent on whether the historical or recent market conditions were used The corresponding gainin the yield for Germany would be around 7 basis points The simulations demonstrate that theexpected gain in the liquidity premium is rather limited and decreases for Member States that already benefit from the highest rating While it is obvious that the Members States currently facing high yields would benefit from both the pooling of the credit risk and the improved liquidity of the common bonds the current low yieldMember States could face higher yields in the absence of any improvement in the credit risk of thecurrent high yield issuers In principle compensatory side payments could redistribute the gainsassociated with the liquidity premium but in the absence of better governance the overall creditquality of the euro area debt could in fact deteriorate as a result of weaker market discipline to theextent that the current low yield Member States would face increased funding costs Enhancing the role of the euro in the global financial system Stability Bonds would facilitate portfolio investment in the euro and foster a morebalanced global financial system The US Treasury market and the total euro area sovereign bond market are comparable in size but fragmentation in euro denominated issuance meansthat much larger volumes of Treasury bonds are available than for any of the individualnational issuers in the euro area On average since 1999 the issuance size of 10 year USTreasury bonds has been almost twice the issuing size of the Bund and even larger than bondsissued by any other EU Member State According to available data trading volumes in the USTreasury cash market are also a multiple of those on the corresponding euro area market where liquidity has migrated to the derivatives segment High liquidity is one of the factorscontributing to the prominent and privileged role of US Treasuries in the global financialsystem backed by the US dollar as the sole international reserve currency thereby attractinginstitutional investors Accordingly the larger issuance volumes and more liquid secondary markets implied by Stability Bond issuance would strengthen the position of the euro as aninternational reserve currency 1 3 Preconditions While Stability Bonds would provide substantial benefits in terms of financial stabilityand economic efficiency it would be essential to address potential downsides To this end important economic legal and technical preconditions would need to be met These pre conditions which could imply Treaty changes and substantial adjustments in the institutionaldesign of EMU and the European Union are discussed below Limiting moral hazard Stability Bonds must not lead to a reduction in budgetary discipline among euro areaMember States A notable feature of the period since the launch of the euro has beeninconsistency in market discipline of budgetary policy in the participating Member States The high degree of convergence in euro area bond yields during the first decade of the eurowas not in retrospect justified by the budgetary performance of the Member States Thecorrection since 2009 has been abrupt with possibly some degree of overshooting Despitethis inconsistency the more recent experience confirms that markets can discipline national budgetary policies in the euro area With some forms of Stability Bonds such disciplinewould be reduced or lost altogether as euro area Member States would pool credit risk for some or all of their public debt implying a risk of moral hazard Moral hazard inherent incommon issuance arises since the credit risk stemming from individual lack of fiscaldiscipline would be shared by all participants As the issuance of Stability Bonds may weaken market discipline substantial changes inthe framework for economic governance in the euro area would be required Additionalsafeguards to assure sustainable public finances would be warranted These safeguards wouldneed to focus not only on budgetary discipline but also on economic competitiveness seeSection 3 While the adoption of the new economic governance package already provides asignificant safeguard to be further reinforced by new regulations based on Article 136 9 theremay be a need to go still further in the context of Stability Bonds notably if a pooling of credit risk was to be involved If Stability Bonds were to be seen as a means to circumventmarket discipline their acceptability among Member States and investors would be put indoubt Ensuring high credit quality and that all Member States benefit from Stability Bonds Stability Bonds would need to have high credit quality to be accepted by investors Stability Bonds should be designed and issued such that investors consider them a very safeinvestment Consequently the acceptance and success of Stability Bonds would greatly benefit from the highest rating possible An inferior rating could have a negative impact on its 9 Proposal for a Regulation of the European Parliament and of the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area Proposal for a Regulation of the European Parliament and of the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area pricing higher yield than otherwise and on investors willingness to absorb sufficiently largeamounts of issuance This would particularly be the case if Member States national AAAissuance would continue and thereby co exist and compete with Stability Bonds High creditquality would also be needed to establish Stability Bonds as an international benchmark andto underpin the development and efficient functioning of related futures and optionsmarkets 10 In this context the construction of Stability Bonds would need to be sufficientlytransparent to allow investors to price the underlying guarantees Otherwise there is a risk that investors would be sceptical of the new instrument and yields would be considerablyhigher than the present yields for the more credit worthy Member States Achieving a high credit quality will also be important to ensure the acceptance of Stability Bonds by all euro area Member States One key issue is how risks and gains aredistributed across Member States In some forms Stability Bonds would mean that Member States with a currently below average credit standing could obtain lower financing costs while Member States that already enjoy a high credit rating may even incur net losses if theeffect of the pooling of risk dominated the positive liquidity effects Accordingly support for Stability Bonds among those Member States already enjoying AAA ratings would require anassurance of a correspondingly high credit quality for the new instrument so that the financingcosts of their debt would not increase As explained this again would rest on a successfulreduction of moral hazard The acceptability of Stability Bonds might be further assured by amechanism to redistribute some of the funding advantages between the higher and lower rated Member States see Box 2 The credit rating for Stability Bonds would primarily depend on the credit quality of theparticipating Member States and the underlying guarantee structure 11 With several not joint guarantees each guaranteeing Member State would be liable for its share of liabilities under the Stability Bond according to a specific contribution key 12 Provided that Member States would continue to obtain specific ratings a downgrade of alarge Member State would be very likely to result in a corresponding downgrade of theStability Bond although this would not necessarily have an impact on the rating of theother Member States In present circumstances with only six AAA euro area Member States a Stability Bond with this guarantee structure would not be assigned an AAAcredit rating and could even be rated equivalently with the lowest rated Member State With several not joint guarantees enhanced by seniority and collateral eachguaranteeing Member State would again remain liable for its own share of Stability Bondissuance However to ensure that Stability Bonds would always be repaid even in case of default a number of credit enhancements could be considered by the Member States First senior status could be applied to Stability Bond issuance Second Stability Bonds 10 The experience of rating the EFSF bonds has showed that a rating of the bond superior to the averageguarantees made by participating Member States was accomplished by different tools such as holding cash buffers loss absorbing capital and over guaranteeing the issuance size While these elements have beencomplex to manage in the case of the EFSF they may prove useful in reinforcing the credit rating of theStability Bond 11 In this section the terms several guarantee and joint and several guarantee are used in an economicsense that may not be identical to their legal definitions 12 Such as an EU budget or ECB capital key could be partially collateralised e g using cash gold shares of public companies etc Third specific revenue streams could be earmarked to cover debt servicing costs relatedto Stability Bonds The result would be that the Stability Bonds would achieve an AAArating although the ratings on the national bonds of less credit worthy Member Stateswould be likely to experience a relative deterioration With joint and several guarantees each guaranteeing Member State would be liable notonly for its own share of Stability Bond issuance but also for the share of any other Member State failing to honour its obligations 13 Even under this guarantee structure Stability Bonds may not obtain or maintain an AAA rating if a limited number of AAA rated Member States would be required to guarantee very large liabilities of other lower rated Member States There is also a non negligible risk that a cascade of ratingdowngrades could be set in motion e g a downgrading of a larger AAA rated Member State could result in a downgrading of the Stability Bond which could in turn feedback negatively to the credit ratings of the other participating Member States due to their contingent liability for all Stability Bond issuance Accordingly appropriate safe guards would be essential to assure budgetary discipline among the participating Member Statesvia a strong economic governance framework and possibly seniority of Stability Bonds over national bonds under an option where these would continue to exist Box 2 Possible redistribution of funding advantages between Member States The risk of moral hazard associated with Stability Bond issuance with joint guarantees might bead dressed by a mechanism to redistribute some of the funding advantages of Stability Bond issuance between the higher and lower rated Member States Such a mechanism could make the issuance of Stability Bonds into a win win proposition for all euro area Member States A stylised example using two Member States can be used to demonstrate The government debt of both Member States amounts to about EUR 2 billion but Member State A pays a yield of 2 while Member State B pays a yield of 5 on national issuance with 5 year maturity Stability Bond issuance would finance both Member States fully with maturity of 5 yearsand an interest rate of 2 The distribution of Stability Bond issuance would be 50 for each Member State Part of the funding advantage that Member State B would enjoy from Stability Bond issuance could be redistributed to Member State A For example a 100bps discount for Member State A could befinanced from the 300 bps premium for Member State B Accordingly the Stability Bond could fund Member State A at a yield of 1 and fund Member State B at a yield of 3 Both Member States would have lower funding costs relative to national issuance Needless to say the mechanism for internal distribution of the benefits from Stability Issuance would need to be formulated but would be linked to relative budgetary performance in the context of the euro area economic governance framework Ensuring consistency with the EU Treaty Consistency with the EU Treaty would be essential to ensure the successful introduction of the Stability Bond Firstly Stability Bonds must not be in breach of the Treaty prohibition However in such circumstances participating Member States would have a claim on the defaulting Member State on the bailing out of Member States The compatibility of Stability Bonds with the current Treaty framework depends on the specific form chosen Some options could require changesin the relevant provisions of the Treaty Article 125 of the Treaty on the functioning of the European Union TFEU prohibits Member States from assuming liabilities of another Member State Issuance of Stability Bonds under joint and several guarantees would a priori lead to asituation where the prohibition on bailing out would be breached In such a situation aMember State would indeed be held liable irrespective of its regular contributing key should another Member State be unable to honour its financial commitments In this case anamendment to the Treaty would be necessary This could be made under the simplified procedure if a euro area common debt management office were constructed under an inter governmental framework but would most likely require the use of the ordinary procedure if itwere placed directly under EU law since it would extend the competences of the EU Unless aspecific basis is established in the Treaty an EU law based approach would probably require the use of Article 352 TFEU which implies a unanimous vote of the Council and the consent of the European Parliament The issuance of Stability Bonds and the tighter economic and fiscal coordination needed for ensuring its success would also most likely require significant changes to national law in a number of Member States 14 Issuance of Stability Bonds under several but not joint guarantees would be possible within the existing Treaty provisions For example increasing substantially the authorised lending volume of the ESM and changing the lending conditions with a view to allowing it toon lend the amounts borrowed on the markets to all euro area Member States could be constructed in a way compatible with Article 125 TFEU provided the pro rata nature of the contributing key attached to the ESM remains unchanged The same reasoning would apply toissuances of a possible common debt management office whose liabilities would remain limited to a strictly pro rata basis The Treaty would also need to be changed if a significantly more intrusive euro area economic governance framework was to be envisaged Depending on the specific characteristics of Stability Bonds fiscal and economic governance and surveillance in participating Member States would have to be reinforced to avoid the emergence of moral hazard Further qualitative changes in governance beyond the proposals included in the23 November package will probably require changes in the Treaty Section 3 discusses such options of reinforced fiscal governance in more depth 2 OPTIONS FOR ISSUANCE OF STABILITY BONDS Many possible options for issuance of Stability Bonds have been proposed particularlysince the onset of the euro area sovereign crisis However these options can be generally 14 For example the German Constitutional Court ruling of 7 September 2011 prohibits the Germanlegislative body to establish a permanent mechanism which would result in an assumption of liability for other Member States voluntary decisions especially if they have consequences whose impact is difficult tocalculate It also requires that also in a system of intergovernmental governance the Parliament mustremain in control of fundamental budget policy decisions categorised under three broad approaches based on the degree of substitution of nationalissuance full or partial and the nature of the underlying guarantee joint and several or several implied The three broad approaches are 15 1 the full substitution of Stability Bond issuance for national issuance with joint andseveral guarantees 2 the partial substitution of Stability Bond issuance for national issuance with joint andseveral guarantees and3 the partial substitution of Stability Bond issuance for national issuance with several butnot joint guarantees In this section each of the three approaches is assessed in terms of the benefits and preconditions outlined in Section 1 2 1 Approach No 1 Full substitution of Stability Bondissuance for national issuance with joint and severalguarantees Under this approach euro area government financing would be fully covered by theissuance of Stability Bonds with national issuance discontinued While Member Statescould issue Stability Bonds on a decentralised basis via a coordinated procedure a moreefficient arrangement would imply the creation of a single euro area debt agency 16 Thiscentralised agency would issue Stability Bonds in the market and distribute the proceeds toMember States based on their respective financing needs On the same basis the agencywould service Stability Bonds by gathering interest and principal payments from the Member States The Stability Bonds would be issued under joint and several guarantees provided byall euro area Member States implying a pooling of their credit risk Given the joint and several nature of guarantees the credit rating of the larger euro area Member States wouldmost likely dominate in determining the Stability Bond rating suggesting that a StabilityBond issued today could be expected to have a high credit rating Nevertheless the design of the cross guarantees embedded in Stability Bonds and the implications for credit rating andyields would need to be more thoroughly analysed This approach would be most effective in delivering the benefits of Stability Bondissuance The full substitution of Stability Bond issuance for national issuance would assurefull refinancing for all Member States irrespective of the condition of their national publicfinances In this way the severe liquidity constraints currently experienced by some Member States could be overcome and the recurrence of such constraints would be avoided in the future This approach would also create a very large and homogenous market for Stability Bonds with important advantages in terms of liquidity and reduced liquidity risk premia The new Stability Bonds would provide a common euro area benchmark bond and so offer a more efficient reference framework for the pricing of risk throughout the euro area financial 15 A fourth approach involving full substitution of Stability Bonds and several but not joint guarantees would also be possible but is not considered as it would not be materially different from the existing issuance arrangements In addition hybrid cases could be conceived for example several guarantees on debt obligations coupled with a limited joint guarantee to cover short term liquidity gaps 16 See section 4 for a review of the advantages and disadvantages of centralised and decentralised issuance system By assuring high quality government related collateral for financial institutions in all Member States it would maximise the benefits of common issuance in improving there silence of the euro area financial system and in improving monetary policy transmission The Stability Bond under this approach would also provide the global financial system with a second safe haven market of a size and liquidity comparable with the US Treasury market and so would be most effective in promoting the international role of the euro At the same time this approach would involve the greatest risk of moral hazard Member States could effectively free ride on the discipline of other Member States without any implications for their financing costs Accordingly this approach would need to be accompanied by a very robust framework for delivering budgetary discipline and economic competitiveness at the national level Such a framework would require a significant further step in economic financial and political integration compared with the present situation Without this framework however it is unlikely that this ambitious approach to Stability Bond issuance would result in an outcome that would be acceptable to Member States and investors Given the joint and several guarantees for the Stability Bond and the robustness required in the underlying framework for budgetary discipline and economic competitiveness this approach to Stability Bond issuance would almost certainly require Treaty changes Under this approach the perimeter of government debt to be issued via Stability Bonds would need to be defined In several Member States bonds are not only issued by central governments but also by regional or municipal governments 17 In principle one might opt for including sub national issuance The obvious advantage would be that the potential benefits in terms of market stability liquidity and integration would be broadened It would also be consistent with the EU approach to budgetary surveillance which covers the entire general government debt and deficits On the other hand pooling issuance only of central governments might deliver a more transparent and secure arrangement Central government data are typically more easily accessed which is not always the case for local authorities Moreover the issuance would cover only deficits fully controlled by central governments From a purely market point of view such Stability Bonds would replace only widely known central government bonds which would facilitate the assessment and valuation of the new Stability Bonds 18 The process for phasing in under this approach could be organised in different ways depending on the desired pace of introduction Under an accelerated phasing in new issuances would be entirely in the form of Stability Bonds and outstanding government bonds could be converted into new Stability Bonds i e in form of a switch of a certain amount of national government bonds in exchange for new Stability Bonds The main advantage of this option would be the almost immediate creation of a liquid market with a complete benchmark yield curve The buy back of legacy bonds could also alleviate the current acute financing problems of the Member States with high debt and high interest rates However the operation may be complicated and would require careful calibration of the conversion rate to minimise market disruption An alternative would be a more gradual scheme i e full or even only 17 This is the case in particular for Germany and to a lesser extent for Spain and France 18 This narrow coverage of Stability Bonds would imply that Member States would have to commit not to issue own national or other sovereign bonds including their sub federal entities if these are included inthe system of joint issuance concentrated in the national bonds amplifying the credit risk 22 The intensified market pressures on national issuance would provide market discipline A key issue in this approach would be the specific criteria for determining the relative proportions of Stability Bond and national issuance The main options would be A simple rule based system For example each Member State could be entitled to an amount of Stability Bonds equal to a specified percentage of its GDP perhaps reflecting the Treaty criterion of 60 An important dimension to consider is how much risk would be concentrated on the national and junior part this being dependent on the size of the common issuance the higher the share of Stability Bond This approach to Stability Bond issuance is less ambitious than the full issuanceapproach above and so delivers less in terms of economic and financial benefits Due totheir seniority over the national bonds and guarantee structure the Stability Bonds would posea very low credit risk the latter reflected in high credit ratings i e AAA The yield on theStability Bonds would therefore be comparable with yields on existing AAA government bond in the euro area In consequence there would be corresponding benefits in terms of euro area financial stability monetary policy transmission and the international role of theeuro although these would be less than under the more ambitious approach of fullsubstitution of Stability Bond issuance for national issuance As the build up phase inStability Bond issuance toward the agreed ceiling would most likely take several years allMember States could during the start up phase have very broad access to financial markets Delpla and von Weizsäcker argue that due to the high default risk red debt should largely be kept outof the banking system by becoming no longer eligible for ECB refinancing operations and subject to painful capital requirements in the banking system via Stability Bonds This would overcome possible liquidity constraints faced by someMember States but for that period give rise to the same moral hazard implications asdiscussed in Section 2 1 under full issuance Given that a return to national issuance for theselatter Member States would be required when the Stability Bond ceiling would be reached they would need to provide reassurance that during this time they would undertake the budgetary adjustments and structural reforms necessary to reassure investors and so maintainaccess to markets after the introductory period The yields on the newly issued national bondswould however rise due to their junior status Ultimately assuming a reasonably high proportion of Stability Bond issuance has been reached the market would be expected to beliquid but less liquid than if all issuances were in Stability Bonds as the residual national bonds would also hold a certain market share On the other hand the preconditions for Stability Bond issuance would be somewhatless binding under this approach Establishing a ceiling for Stability Bond issuance wouldhelp to reduce moral hazard by maintaining a degree of market discipline through the residualnational issuance However the relationship between moral hazard market discipline andcontagion risk in determining the appropriate Stability Bond ceiling is not straightforward Arelatively low Stability Bond ceiling implying a large amount of residual national issuance would limit moral hazard but could leave Member States with existing high debt levelsvulnerable to the risk of catastrophic default on their national issuance Such a catastrophicdefault would carry contagion risk for the euro area as a whole A relatively high StabilityBond ceiling implying a small amount of residual national issuance would imply a greater risk of moral hazard but would still allow the possibility of default in a Member State withless catastrophic effects and less contagion risk for euro area as a whole A robust framework for maintaining fiscal discipline and economic competitiveness at national level would still berequired to underpin the Stability Bond issuance although the market discipline provided viathe retention of national issuance might imply a less dramatic transfer of sovereignty thanunder the approach of full Stability Bond issuance Meanwhile the choice of ceiling wouldalso determine the likely credit quality of the Stability Bond A relatively low ceiling wouldunderpin the credit quality of Stability Bonds by limiting the amount of debt covered by thestronger joint and several guarantees 23 The joint and several guarantee for the Stability Bondwould almost certainly require Treaty changes The process for phasing in under this approach could again be organised in differentways depending on the desired pace of introduction Under an accelerated phasing in acertain share of outstanding euro area government bonds would be replaced by StabilityBonds at a pre specified date using pre specified factors This would rapidly establish acritical mass of outstanding Stability Bonds and a sufficiently liquid market with a complete benchmark yield curve However it could imply that most Member States reach the ceilingsat the moment of the switch and that they would have to continue tapping capital markets withnational bonds Under current market conditions this might constitute a drawback for someMember States Under a more gradual phasing in all or almost all new gross issuance for 23 The proposal by Bruegel sets the ceiling at 60 of GDP using the Maastricht criterion as reference butother proposals with even lower ceilings have been made Indeed it has been argued that a sufficiently lowceiling virtually guarantees zero default risk on Eurobonds A standard assumption in the pricing of default risks is that in the case of default 40 of the debt can be recovered Applying this consideration to sovereign debt a ceiling below the recovery value would imply that the debt issued under the common scheme will be served under any condition Member States would be in Stability Bonds until the Stability Bond issuance target ceiling isreached Since for several years only or nearly only Stability Bonds would be issued thisapproach would help to ease

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  • Debate with Simon Coveney on Morning Ireland – Thomas Pringle TD
    term memory loss over controversial role as FF Minister for the Marine Biomass in Donegal Local supply and local demand driving job creation Home Follow Thomas Debate with Simon Coveney on Morning Ireland Debate with Simon Coveney on Morning Ireland By admin Tweet Pin It Updated 18th May 2012 Click here to listen to the debate with Coveney on Morning Ireland 18th May on Bruton s outburst regarding a second vote Be Sociable Share Previous Story Irish Times Article Independent TD takes legal action over EU treaties Next Story Thomas Pringle v Government of Ireland About admin Contact Info Killybegs Constituency Office Connolly House Bridge Street Killybegs Co Donegal 074 97 41880 thomas pringle oir ie Latest News Look out for my General Election 2016 newsletter February 11 2016 12 59 pm DONEGAL NOW Donegal TD reveals Minister Lynch will not meet with Save Our St Joseph s Campaign February 11 2016 11 24 am DONEGAL NOW Calls on Burton to provide additional funding for community services programmes February 11 2016 11 23 am HIGHLAND RADIO Pringle claims other alternative energy projects will benefit Donegal more February 11 2016 11 21 am Pringle reveals Pat The Cope s short term

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  • Irish Times Article: Independent TD takes legal action over EU treaties – Thomas Pringle TD
    will be a question over the validity of a Yes vote in this month s referendum He claims the ESM treaty will set up a 500 billion bailout fund which will give the power to an ESM institution to call on Ireland to contribute more than 11 billion to that fund in various forms of capital That is the equivalent of about one third of Government revenue for last year and the ESM can increase that figure at any time with no limit he claims In effect the ESM can direct the State to raise sovereign debt give the money so raised to it and can then decide whether and how it is to be spent he says Mr Justice Roderick Murphy yesterday gave lawyers for Mr Pringle permission to serve short notice on the Government of their intention to seek an expedited hearing The application was made with only one side represented and the judge made it returnable to next week Mr Pringle argues that the changes proposed are so fundamental they should also require the approval of the Irish people He wants the court to consider whether the ESM treaty the second treaty which he says the Government will push through without a vote is in breach of existing EU principles which have been approved in previous referendums He also wants the court to examine the legality of an amendment to an existing treaty which he says will also be pushed through without a vote if the May 31st referendum is passed This will be an amendment to article 136 of the Treaty on the Functioning of the European Union He wants the court to look at this amendment before any further action is taken by Government to approve it This amendment is being adopted under a so

    Original URL path: http://www.thomaspringle.ie/2012/05/17/irish-times-article-independent-td-takes-legal-action-over-eu-treaties/ (2016-02-16)
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