asked the Minister for Finance if it is intended to raise the matter of the bandwidth within which the punt operates in future meetings with other EEC Finance Ministers with a view to its revision.

The answer to the Deputy's question is in the negative. No change is proposed in the fluctuation margin applicable to the Irish pound.

Does the Minister agree that the band chosen appears to have had repercussions not anticipated at the time in view of the long-term strengthening of the British £ and that the band chosen by us invites the rather ominous prospect later this year that the Irish punt will lose even against other currencies within the present EMS system?

No, I would not agree with either of the Deputy's suggestions. The fact is that the band chosen has no relevance whatsoever to the movement of sterling. I should point out, in case it is necessary to do so, that the Irish punt has not weakened sterling has strengthened. In relation to the EMS currencies the Irish punt has maintained its position quite satisfactorily. Of course, that is the object of the exercise of the EMS within the bands of the EMS. The movement of sterling is due to other factors, but it is in relation to all the EMS currencies, not just the Irish pound. Perhaps I should point out further that the major argument advanced for adopting the wider margins was that it would enable us to maintain the link with sterling longer than the narrower margins which we chose. But in fact the link with sterling would have broken less than a fortnight after it was broken even if we had had the wider margins. I suggest that the arguments which were gone into in this House as to why we should adopt the narrower margins still apply and the arguments put forward against that have in practice disappeared.

It is true that we have not fallen against the other currencies in the EMS. It is true, as a result of the strengthening of the pound sterling, that we have lost value against the pound sterling. Would the Minister agree that this will lead to increased inflationary pressure here as the British pound increases and ours depreciates against theirs?

I think that is dealt with in the next question.

Increasing inflationary pressures here at home, leading to a possibility of a severe balance of payments situation later this year with the result that we will fall against other currencies in the EMS basket means that, at that point we will a very serious situation indeed on our hands?

It is also an argument based on a false premise, as I would hope to show in replying to the next question.

21.