The Irish Government is to buy foreign exchange on a massive scale at 0 to 0.99 per cent over the next five years.

Foreign Exchange (FI) will be available to citizens and residents of Ireland and the Republic of Ireland as well as to institutions of higher education.

It will be sold at a market rate of 0.98 per cent per annum.

The Government says it will buy the FI at 0 per cent on the day of a major economic event and will apply the same price when a major bank or other financial institution purchases FI.

It also said it would increase the purchase of FI by 0.5 per cent each year.

The Government said it will also apply a 0.2 per cent levy on all overseas transactions in 2018.

For its part, the Irish Central Bank (ICBC) is expected to sell the FI on a one-year basis, with a 0 per Cent rate to be applied to transactions outside the Republic.

Irish Central Bank governor Brian Jackson said the move is aimed at bolstering liquidity, and would also help the banking sector.

He said the FI will be used as an insurance policy for bank deposits and would be used to facilitate transactions.

Jackson also said the new regime would support Ireland’s economy by boosting trade and investment.

The Irish Government will be selling foreign exchange to the public on a three-year rolling basis.

The purchase of foreign exchange will come in three phases.

First, the government will purchase up to €3.2bn of FI on behalf of the Irish public in 2018 and 2019.

Second, the Government will purchase approximately €2.5bn of foreign currency in 2019 and 2020.

Third, the State will purchase an additional €2bn worth of FI in 2020.

The government said the government is also likely to sell up to 1,500 million Euros of foreign-currency assets, or up to $1.8bn, in 2020 and 2021.

The amount of these assets is expected the State to raise up to 20 per cent of its FI purchases in each of these three years.

The sale of FI is expected at a rate of about €3,200 per person.

While foreign exchange is being sold at the lowest rate possible, it is expected that the Government is looking at an average of 1.7 per cent rate on purchases in 2018-19 and 2.2 on purchases next year.

The State also said that the FI market will be the biggest market in the country by 2020, with around half of the total foreign exchange market coming from the FI markets.

Irish central bank governor Brian Jacobson said the market would be the largest in the world and that there was a “clear need” for a foreign exchange strategy for the country.

“This will allow us to manage the financial challenges and issues that are facing our country.

The introduction of FI will also be a great opportunity for the economy and will help to reduce the impact of the economic downturn on the Irish economy,” he said.

Finance Minister Paschal Donohoe said the Government had a “strong” strategy for FI and the move was “just the start of a process”.

“This is a new era for our economy.

I’m pleased to announce that the government’s strategy for foreign exchange investment will be announced in the coming months,” he added.

There are currently around 6.6 million FI in circulation, with the majority of these being bought by banks.

Last year, the Reserve Bank of Ireland, the European Central Bank and the International Monetary Fund (IMF) bought about 1.6 billion FI for the Irish market.

In a statement, the IMF said it was committed to supporting the Irish financial system through FI and had a long-term plan to invest in the FI sector.