The International Monetary Fund has said the Government should introduce a special tax on the profits of banks and the pay of their top executives to help fund future banking crises.
The IMF says such a tax would be both a fair contribution from the industry and would help limit the sector's size and hence its risk.
The tax should be linked to a special resolution mechanism, which would require banks to set out plans for their own winding up in the event of failure.
The IMF has also urged NAMA to begin selling off its portfolios quickly and aggressively, in order to return the property market to normal conditions in the shortest possible time.
The Washington-based fund has repeated its call for the Government to consider a narrowly targetted support mechanism for heavily indebted homeowners to limit the economic and social fallout from the financial crisis.
It says the banks, bolstered by State capital, could absorb the initial costs, and could use the social welfare system to identify eligible beneficiaries.
It says the process of reducing the economic stress on homeowners would be helped by having what it calls an overdue shift to a more efficient and balances personal insolvency regime. This could allow for a swifter and less costly alternative to the current bankruptcy laws.
The Fund praised the Government’s handling of the crisis, saying Irish policymakers have gained significant credibility but said it was necessary to keep demonstrating commitment and active risk management to retain confidence.
But the IMF also urged the Government to stick to its targets for cutting the deficit in the coming years. It also called on the Government to be more specific about the measures it would take.
The IMF's board was issuing its comments after considering a report from its staff on the Irish economy. The IMF delegation spent two weeks in Ireland in mid-May, during which it met the Finance Minister and public and private sector bodies.
Its report, issued late last month, predicted that the economy will shrink by 0.6% this year, but grow by 2.3% next year.
Read about the ESRI's latest view of the economy here
Today, the IMF board said the speed of recovery was likely to be moderate, with 'relatively limited' growth and high unemployment.
The IMF board also called for the setting up of a 'fiscal council' to advise the Government on risks to the public finances.
Minister for Finance Brian Lenihan welcomed the report and said he was open to considering additional enhancements to the process of budget reform.
