ECB chief insists central bank 'siding with Ireland'
Published 06/05/2011 | 05:00
THE president of the European Central Bank last night insisted it was "siding with Ireland" and had given the country an "absolutely" unprecedented level of financial support.
Jean Claude Trichet's comments come a fortnight after former Finance Minister Brian Lenihan accused the ECB of "betraying" Ireland and "bouncing" the Government into a bailout deal.
Asked about Mr Lenihan's comments, Mr Trichet appeared familiar with the matter but said he had "no particular comment on what has been said by any speaker".
"I would only say that the level of commitment of the euro system (ECB) to Ireland has absolutely no precedent," he said, referencing the €180bn of ECB cash that's keeping Irish banks afloat.
"The facts are speaking for themselves," Mr Trichet added. "We are siding with Ireland in these difficult circumstances".
Europe's most powerful banker also dismissed suggestions that the debt burdens on troubled countries like Ireland, Greece and Portugal would soon become unsustainable, making restructuring and rescheduling the debt and repayments the only option.
"We have a plan, we apply the plan and that (rescheduling and restructuring) is not part of the plan," he said.
He added that honouring the debt commitment was "key for credibility and credit worthiness" of weaker countries.
Five months after Ireland's plan was drawn up, investors are still demanding interest rates of almost 10pc to buy Irish government debt, which is more than 6pc above the interest rate commanded by 'safe' German bonds.
Asked whether investors' lack of confidence in Irish debt meant the plan had "failed" and Ireland would be unable to honour its debts, Mr Trichet insisted the Irish plan had been "approved by the entire world".
"Ireland also has a plan for restructuring and reshaping the banking sector which has been, to my knowledge, considered by observers and market participants as credible," he added. "I share that view."
Mr Trichet also used his monthly press conference to highlight "risks" that some countries' budgets may "fall behind targets" set in Europe and said it was "essential that all governments" meet their committed targets.
The ECB chief declined to name names, but insisted that these comments applied to countries across the board and not just weaker states.
"We expect all countries to be up to their responsibility in the present circumstances," he said. "That is the very, very clear message of the governing council."
Before the March 31 banking bailout, the Government had been appealing to the ECB to provide a 'medium term' cash facility for Irish banks so they wouldn't be dependent on emergency funding.
Yesterday Mr Trichet dampened hopes for any such programme, saying that newly-rescued Portugal would be given "nothing new, nothing special" to help fund its banks.