Finance Minister Michael Noonan says the amount of deposits being withdrawn from the 'pillar' banks - AIB, Bank of Ireland and EBS - has been 'very significantly' reduced since last Thursday's banking announcements.
Mr Noonan claimed the reaction to the announcements showed that confidence had been restored, though he said confidence was 'a fragile flower', which could fade under the stress of international events.
The Minister also said the Government identified extra assets that could be sold off by the banks in order to ensure that they would lend €30 billion into the economy over the next three years.
He said that, on average, €10 billion of existing loans is repaid in the banks' core businesses, giving a total of €3 billion over three years.
Minister Noonan said that if the banks had held on to this money and restricted new lending, they would have needed to sell off or run down just over €25 billion of assets.
But Minister Noonan said the Government wanted to ensure that this €30 billion was kept in the economy, and for this reason it identified extra assets to be sold off.
Former Finance Minister Brian Lenihan said the policies of the new government were yielding some success because they had built on the policies of the last. He said the Minister had now given a more extensive banking guarantee than the previous one.
Mr Lenihan also claimed it was 'a form of economic treason' to demand that bank debt should be dishonoured, as some TDs have suggested. Responding, Pearse Doherty of Sinn Féin said the only economic treason was when Deputy Lenihan sat on the Government benches and 'hung, drew and quartered' the Irish economy.
Independent TD Shane Ross has said the Government needs to look seriously at defaulting on our debt. He said it would be part of a practical solution to our problems and would give the Government the opportunity to rebuild financial institutions on their own terms.
Deputy Ross also warned against the dangers of cartels being formed in a two-pillar banking system.
Socialist TD Clare Daly called for the bondholders to be identified given the era of transparency that the Government was advocating.
Independent TD Mick Wallace advocated putting pressure on European politicians to impose burden-sharing. He said he had no doubt that they would respond favourably.
Anglo, INBS bonds 'open issue' - Elderfield
Financial regulator Matthew Elderfield has said actions against senior bondholders in institutions which are being wound down is still as 'open issue'.
Speaking at a Reuters event in London, however, he reiterated that action would not be taken against senior bondholders in AIB, Bank of Ireland, EBS and Irish Life & Permanent.
Mr Elderfield said there had been much debate about this issue, but that markets now had certainty about Government policy.
But he said Anglo Irish Bank and Irish Nationwide were different, as they were banks in wind-down mode with limited exposure to the market. Mr Elderfield said action on senior bondholders in these institutions was really a matter for the Government, but that it was an 'open issue'. He said there was around €4 billion of such debt involved.
Mr Elderfield also said that the €24 billion to be put into the banks as a result of last week's stress tests was a gross cost to the State, and would be reduced by the sale of some assets and actions involving subordinated, or junior, bondholders.
He also told his audience that he did not underestimate the legal challenges the Central Bank may face in using new powers to remove bank directors who do not meet certain standards.
Link bonds to growth - Honohan
Central Bank Governor Patrick Honohan has suggested the option of offering Irish government bonds which would be linked to economic growth.
Writing for the Financial Times, Professor Honohan said that under such a scheme, Ireland would pay more if its economy grew strongly, but less and more slowly if growth remained weak. He said such a mechanism could also be useful for other countries.
The Central Bank chief also echoed comments from financial regulator Matthew Elderfield about the decision not to impose losses on senior bank bondholders. He said this decision reflected the legal complexities and costs to the country's reputation which would be involved in any other approach, and 'especially the sensitivities of EU partners'.
