Ann Nolan, second secretary in the department, said it was the view of the Department of Finance in 2010 that it was necessary to provide unconditional financial support to the relevant banks.
The notes, issued under the provisions of the Credit Institutions Financial Stability Act 2008, were issued in circumstances where the troika was anxious there would be significant sums available for capitalisation of banks, she said.
She agreed the troika was not involved when the 2008 act, providing for unconditional financial support to be given, was passed by the Dáil.
Ms Nolan was giving evidence in the hearing of the challenge by United Left Alliance TD Joan Collins to two promissory notes of 2010, under which the State agreed to pay some €31bn to Anglo, INBS, and EBS extending over a period of 15 years to 2025.
The notes allowed the institutions to secure emergency liquidity assistance from the Central Bank. The Anglo note has since been converted into government bonds.
Ms Collins claims the minister had no power under the Constitution to issue the notes. Their issuing, she said, was unlawful and “the most profound attack on the democratic nature of the State”.
Ms Nolan said the promissory notes were a financial support given to selected institutions. In 2010, Irish financial institutions were subject to “a liquidity crisis squeeze”, as well as “potential solvency” issues in some cases. It was important an “unconditional and flexible” mechanism be seen to be available to provide additional financial support to individual institutions, should that be required.
Evidence has concluded and the three judges in the case will now hear legal submissions.