 Thank you very much Dahi and the Institute for inviting me to come today. Very broad subject, debt crisis, Europe and Irish policy responses, but I'm going to try to focus in on three specific topics, which I think are fairly important, but it's not intended to be an all-encompassing overview of all of the issues. I'll try and be fairly concise on some of the points I make. I may not perhaps develop as much as I'd like in my remarks, but there's always the discussion, question and answer session. Now, I've decided to focus on three issues. One, a rather crude title, paying the debt. And second, what I think is a conceptually somewhat different issue from paying the debt is the future architecture of the Euro area. And third, I'd like to talk about lessons for Ireland from this experience. And the lessons I will offer are maybe a little bit less conventional than some that are talked about. So with that, let me address the first issue, paying for the debt. Now I believe this is useful to conceptually distinguish between the issue of how we deal with the current stock of debt, if you like the mistakes inherited from the past and the excesses of the last 10 years, and how going forward, if you like, we try to fix things such that there is not a repetition of what happened. But even if we don't go forward very well, or there's a lot to be done there, there is still the issue, even if the Euro area were to collapse, of paying for the debt. And the way I look on this is that debt does not go away. You have a lot of schemes and proposals and suggestions for dealing with the debt. And some of them get the impression that we can kind of get rid of the debt by just some sort of paper transactions. But in fact, debt does not go away. And what happens to debt is it's paid for. And many of the proposals that are discussed essentially involve significantly different distributions of the bill between different entities, be they countries or within countries or institutions and so on. I'd like to just go through these in order to clarify some of the issues. Okay, the first is obviously austerity. We all know about that. There's nothing much to say in the sense that the debtor pays. The second set of things is a rather large sort of package of proposals and schemes. We hear one every day or one every week or one every month. And all of these essentially involve assigning the bill to certain places. And when you sort of unwrap all the silver wrapping, peel back the onion, you actually find that most of these end up broadly speaking in a certain place. Whether they be debt write-offs or schemes such as ESM buying bonds, ECB buying bonds, ECB lending money to the ESM to buy bonds, ESM giving money directly to banks and so on. There's a whole list of these. But essentially what all of these proposals involve is either in some cases, if it's a debt write-off, a direct cash payment. Or the assumption, if you like, by these other entities of risks, of non-payment, which over the long term could mean the same thing. Risks which the market is not prepared to bear at the moment, at a reasonable price. And what this actually means is that when you look behind most of these schemes, most of the bill ends up what I call on the road to Berlin now. Northern countries more generally, but for short-hand purposes, let's call it Germany and Berlin. There's nothing wrong with this, but I think it's important to realize that the issue in this set of proposals, if you like, essentially comes down to the question, is Germany, for short-hand purposes, prepared to pay the bill that is involved in all of these different schemes in order to fulfill a wider goal, such as the continuation of the euro? And sometimes this issue is not put as clearly as I think analytically, at least it should be. But we can discuss whether they should do that or not and whether it's in their self-interest to do it or not. That's a different issue and we'll come back to that in the discussion. But that is really the heart of the issue at stake. Now, there is a third way to pay debt, it's the only way left, which is essentially if you can't get more out of austerity, political limits. If taxpayers are not willing to directly put their hands into the pockets of the government to pay via the ESM or the ECB for the other solutions. And by the way, I say that because the ESM and ECB, the reason that this ends up with Germany is not very mysterious, it is that Germany is the major shareholder in the ESM and the ECB. But if you can't do that, there is another way. It's a very bad way, it's the worst way, but actually governments over the centuries have often resorted to this scheme, which is to essentially try and inflate the debt away. This is not something I propose, although I have written about it. And there are many costs and redistributive issues involved. But my point would be that if you can't bring yourself to pay directly the bill and get the taxpayers to pay it out of the second set of alternatives, then actually what governments can do and have done is stolen the money, if you like, to put it crudely, out of people's pockets by inflation. This is a very bad way, but it can end up that way. And unfortunately, if A and B may not necessarily produce the results, and I think Germany has to be aware of this, one could end up regrettably and unfortunately with a bit of the inflation route. As I say, scoundrel governments over the centuries have resorted to some element of that. Now, second area I wanted to talk a little bit about is the future architecture, which I think is conceptually a different issue from the question of paying the bill. Even if the euro area were to disappear, in fact, we would still have the problem of who paid the bill. But let's assume, let's assume we want to continue with the euro area. What are the essential elements? And I'll distinguish between the necessary elements and other add-ons in a moment to make a currency union work. I'm drawing a little bit on my own experience with currency unions elsewhere in the world over the years. Okay, the essential elements are, in my view, essentially three. First, you obviously need a common monetary policy. One interest rate fits all. You might say that's not controversial. Not so far, it hasn't been. Let's hope it might be in the future. I would say, for example, that this is not to be taken for granted. For example, the breakup of the former Soviet Union, Ruble area, which was one of the last great breakups of a currency area, it broke up on economic grounds because Russia wanted to maintain a very expansionary, inflationary monetary policy. And most of the other countries did not. And so they decided there was no alternative but to up and go. And they did, actually they did with the support of the IMF. Second element is, of course, the fiscal compact and everything goes with it. The reasons are fairly obvious, free rider problems, and so on. Otherwise, we know about that. However, that was there on paper under Maastricht, but it wasn't followed, at least effectively. The third element which Governor Hohnen spoke very eloquently about, and which I think is absolutely critical and essential, is the pan-European financial regulation system. Totally missing in the 10 years up to the crisis. Countries left to their own devices, and we know many of them didn't do a good job. Why is this an essential element? It is because, first, we have contagion. So if a bank failure in country X happens, it actually matters to country Y because of the common, commonality between the banking systems. And second, of course, you might say, well, you know, if the fiscal compact would be all right. But the problem is that when banks fail, as we know only too well, it's a long history of this, governments end up, unfortunately, throwing out fiscal compacts, deficit rules out the window, and actually coming out and saying we have no alternative to bail out the banks. And we all know, in Ireland's case, what happened. So essentially, given this political reality that governments will bail out banks, you've got to have something there which will prevent this problem from arising. Otherwise, your fiscal compact is going to get blown. Otherwise, you're going to end up where we are now. Now, there are, however, things that have been talked about a great deal, including over the last weeks and days and months, which I think should be distinguished from what I call the essential elements. They're what I call sort of optional extras. I don't think analytically they are essential from an economic point of view to make a currency union work. And actually, some currency unions in the world work reasonably well, thinking of those in Western Central Africa and the Eastern Caribbean at the moment, which do not have these elements. Let me just mention them. Euro bonds, if people meet the fiscal compact treaty, then they're not going to have a debt problem, so why do we have to neutralise the bonds? Fiscal transfer union, fine if you want to equalise incomes and so on across countries. Not necessary for a currency union, maybe very desirable in its own right. Common deposit, insurance scheme, maybe not. I could see analytically arguments that that is nice to have when not necessarily optional, necessary, and political union. Now, all of these things, I am not arguing in favour of them or against them. I think we all have opinions on them, and they're more politically based, if you like, but what I'm just making the point is that one should not necessarily argue in favour of these on the grounds that they're essential for a currency union. Some currency unions work quite well without them. Of course, politically, someone might say, well, we have the other planks, the fiscal compact and so on, but maybe they won't work, so we need backstops. We need a double lock, a triple lock, so we have a fiscal union. And then that maybe to, you know, compromise that we put on top of a political union. I can understand that that's a point of view, but speaking as an economist, economists tend to dislike redundant constraints. It's just the nature of the way we think. And I think that some of these things, nice if you can have them, if the support for them, great. And let me finally say that one thing that I think is highly undesirable, not only unnecessary, but undesirable, in a currency union, or indeed in any country, which is the idea that the central banks should be the lender of last resort to governments. Central banks, classically, are lenders of last resort to banks, to solvent but illiquid banks, and they should be prepared to lend unlimited amounts to them. But believe you me, the idea that a central bank would lend unlimited amounts to government is actually a terribly bad idea. It's what Zimbabwe does. It does Argentina, it could cite dozens of countries. And if anyone ever really gets that idea going and it becomes a live possibility for the euro area, then to be honest, in my view, that would be the end of the euro pair, because you would have unlimited inflationary pressures. So, enough on first part, or first two thirds. Ireland. Ireland policy is smart. So now it could be a lot said about this, but I wanted to take a particular sort of a line, if you like, which the risk of being maybe a little bit provocative and controversial. I want to talk about two things, how economic policy making in Ireland has been undertaken over the last while, prior to the crisis, and second a little bit about the way we approach Europe. Now, what lessons have we learned? Well, we know trivial point that we're unlikely to have another property boom in Ireland. We're going to probably look after the banks more carefully. We're going to watch our budget and so on. So it's very unlikely that we will have the same kind of crisis that we had just now, for many a long day to come. But we might have another crisis. After all, we've had two in 25 years, which is a lot. And there could be another crisis, 10, 15, 20 years, as Donald Rumsfeld called the unknown unknowns. We know, I have no idea what it is. And the question then is, have we learned from this experience in terms of how we go about doing things, how we go about making economic policy, so as to avert some potential future on no one crisis in the future? Now, what I would suggest is that there are a number of clearly clear features in the pre-crisis period, which was highlighted by Honahen report, a little bit more explicitly by the Neiberg report, which did identify some fairly fundamental ways, issues, I think, in terms of how we went about doing things. And they were relevant, I think, for both financial crisis. First of all, we have a reluctance to entertain contrarian views. The record is replete with the consensus building, the cozy consensus, the disinterest in alternative points of view that permeated economic policymaking during the 10 years up to the crisis. We had a reluctance to inject, let's say, external views and opinions into our major institutions. And I say this perfectly because in my own background, I'm not trying to suggest that foreigners necessarily or people from abroad would have better views. In fact, many of them probably mightn't have had. But it is striking to notice that in the three major institutions, Finance Regulator and Central Bank, there was not, I think I could speak correctly on this, in the high restrooms of those institutions, there was not a single person who had had professional experience working outside the country. This is not to put forward foreign expertise for the sake of it, but I do believe an injection of alternative views will lead to more questioning and a greater conviction, a greater searching among the domestic policy makers as to whether they really are on the right track. Another element was a complete absence of risk management. What I mean by that is exploration of what I call high, low probability, but high cost events. No, we have one consensus, the soft landing, fine. Many people may feel that's right, but did anybody think about what? Just suppose, just suppose this didn't happen. Let's consider that. Zero work in the three institutions that I mentioned. And finally, a little point I would say is, a reluctance, at least again, want to observe this, for people to actually say what they think. This explains to some extent why there's an absence of official records as to the thinking prior to the guaranteed decision. There was a tendency, I think, for people to say, well, let's see what the general view is and so on, and we'll see how the consensus works out, but there was a reluctance to actually say, this is my opinion, in advance of knowing what the consensus would be. Now, I haven't invented these ideas, but I think they're quite prevalent, and many people you talk to who are associated with this, the crisis, or even observers outside, say, you know, these are definitely problems with the way we go about doing things. So the question you might say then is, well, have we learned in a sense, if these are problems, let's suppose they are, have we done something different? And here, I think the answer is a little bit mixed. Yes, we have, for example, injected, if you like, people with extensive outside experience, both within Ireland and outside. We know Governor Honin, Mr. Anderfield, Stefan Gerlach, John Moran, all these people are bringing new views, and that's very good. My question is, and I do not know the answer, I hope that 10 years from now, when these people pass, and you know, the troika has been sent packing and so on and all as well, will we have learned a little bit that lesson that it is intrinsically useful to have some broader experience injected? Now, a second issue, the contrarian issue, the debate, the disagreements, have we learned from that? Here, again, I'm going to just put a question, I'm not entirely sure. I think there is still a tendency to somewhat be reluctant to discuss openly unconventional or slightly difficult issues. And let me offer just a couple of examples. It's often said now, Samantra, that the guaranteed decision of September 2008 was the absolute worst thing that any government ever did. I don't want to get into the debates, the merits of this or not, believe you me, but I think it's a complex issue. But there is sometimes I get the feeling, a little bit in the media, that anybody who would even dare to discuss this and talk about pros and cons is simply dismissed. Everybody knows that it was the worst thing that ever happened. Corporate tax rating, I hear in treading on another one. There's no discussion of this in Ireland. It's a complex issue involving issues for Ireland, issues for Europe, issues, whatever. But I do have this definite sense directly, actually, that anyone who wanted to sort of talk about these issues and put them into the realm of public debate runs the risk of being accused of not wearing a green jersey, of somehow being a bit disloyal. Well, all I can say is we do know what happened, the last time the green jersey agenda was sort of put forward. And finally, and I don't want to make a personal political comment on this, but it was rather striking. This is just another example. Only last week when the ESRI put forward thoughtful set of discussions on an issue, the use of privatization funds in Ireland, complex issue, many sides to it. But unfortunately this met with immediate dismissal at a high level, that this was essentially the musings of academic economists that was completely irrelevant. I found that striking. I won't use any other adjectives than that. But I'm not sure have we therefore created the space, if you like, right now to yet to be able to debate in a way that we never did, I think during the period to the crisis. Have we learned from that? And are we willing to have debate on uncontroversial issues and issues that are complex? I'm not sure, but maybe people will have views. Let me finally say a word on Ireland's approach to the Euro. And I'm also going to be, my apologies again, a little bit provocative here. There is a perception. I think it's not a tiny perception. I'm saying this right or wrong, that Ireland's been a little bit half-hearted in its approach to Europe. That we tend to think what's in it for us as opposed to addressing constructively broader European issues. This was arguably the case for many years before the crisis. And to some extent, one can suggest that maybe some of our responses to the current debates and the crisis issues reflects that a bit too. For example, contagion. Now, we all know the debate, the argument with ECB about, you know, you can't burn the bondholders because there'll be contagion. Not trying to address the merits of that, but the European view, we didn't challenge that. We didn't say, for example, no, we disagree that there's contagion. Or we think contagion is small, or we don't think contagion matters. We simply didn't engage on that. We just simply said we want to burn the bondholders. And I thought there was a little bit unfortunate that we didn't address the substance of the issue. Another issue would be to do with the finance, international finance services tax. Do we address whether this is a good issue or a bad issue for Europe as a whole? We tend to think of it, well, how will it affect Ireland or not? Now, I can understand that. Obviously, from a country point of view, one wants to defend one's interests. But that can lead much too much to a situation where we're seeing just as a country that's all that they contribute. But I think we can contribute more by engaging on issues serious, substantively, and constructively about what are issues that affect the well-being of the Euro areas whole. And after all, we have as much interest in the Euro area working very well as a system. And I think we can do more to contribute on systemic issues. I'm sorry, let me finish here. So that is basically my third point. I don't think we're taken sufficiently seriously in Europe. I think we could be, but we'd have to adopt a somewhat, a broader approach to the way we engage and discuss issues. Thank you, Mr. Chairman. Thank you.