Central Bank Governor Patrick Honohan has said "it now seems likely" that efforts to restructure the payment of promissory notes to the former Anglo Irish Bank will be successful.

Prof Honohan said the Central Bank had been working vigorously with the ECB on the issue to ensure an acceptable cost is arrived at in dealing with the payment due on 31 March.

He said he was constrained in what he could say as there were matters he could not address in public at the session.

He said the use of a long-term bond would be a “major step forward” as it would put off actual cash payments for a number of years.

Governor Honohan said the arrangement is “in the direction he would like to see it going”.

He said when the arrangement is complete there will be no net outlay of cash because the promissory note would be replaced with a sovereign bond.

However, Sinn Féin Deputy Pearse Doherty expressed concerns about the 6.8% interest on the government bond that may be swapped for the promissory note, which he said was extremely high.

He asked if there was a mechanism to ensure that the bond could not be traded by Irish Banking Resolution Corporation on the secondary bond market.

He said the proceeds would then go into the pockets of an undisclosed bondholder rather than going back to the state.

Governor Honohan said the minister would be very reluctant to envisage any such transaction and would have powers to ensure this did not happen.

He agreed that interest rate would be in the region of 6.8%.

However, he said the economic value was in reality much lower because the bond would be passing between State-owned institutions.

He said there would be “no net cash payment as the money would circle back to the exchequer."

He added: "The net cost would be quite low in terms of the alternatives."