Letter shows ECB threat ahead of Ireland bailout (European Central Bank)

EU Observer ^ | 11/06/14 @ 16:26 | Honor Mahony

[Olog-hai]

The European Central Bank on Thursday (6 November) formally made public a letter showing that the eurozone bank threatened to pull emergency bank funding if Ireland did not enter a bailout and undertake austerity measures in 2010.

The letter, signed by the then-ECB president Jean-Claude Trichet, speaks of “great concern” about the solvency of Irish lenders—which had loaned heavily to the overheated construction sector—and the extent to which the whole eurosystem was exposed.

It then says that the ECB would cut off emergency funding to Irish banks unless Ireland meets four conditions, including getting a bailout and undertaking “fiscal consolidation, structural reforms and financial sector consolidation”.

The letter, sent 19 November 2010 and first published by the Irish Times early on Thursday morning, was part of an exchange of four between Trichet and the then Irish finance minister Brian Lenihan.

Other conditions laid out by the bank for the Dublin government was that it should put new capital into Irish banks, and that the government was to underwrite the money already given to lenders and guarantee its repayment. …

[Incorrigible]

Not a revelation. Ireland had no choice at that point anyway. Now that a big chunk of Ireland’s young families have departed for Australia and Canada leaving the keys to the house on the counter at the bank, where does the country go from here?

[Olog-hai]

Of course they had a choice. They could have rejected the bullying outright; they did not need the loans. Seems like everyone’s forgotten that the bullying triggered a general election so that the EU could get the kind of government that would take the loans.