Extended guarantee scheme is approved by Draghi
But Government castigated by new ECB chief over lack of consultation
Published 15/11/2011 | 05:00
ECB President Mario Draghi has given his first decision in relation to Irish banks -- by signalling that he wants to extend the bank deposit guarantee scheme for at least another year.
Mr Draghi said the scheme for deposits over €100,000 (known as the Eligible Liabilities Guarantee) was essential for financial stability and also should remain as Ireland was complying with the rescue programme outlined by the 'troika' of the ECB, the EU and IMF.
However, Mr Draghi and his officials have once again castigated the Irish Government for consulting them too late on such measures.
The Government wants to roll over the scheme until the end of next year, but needs ECB and Dail approval.
"The ECB reiterates its position as expressed in previous opinions that the consultation should take place at a point in the legislative process which affords the ECB sufficient time to examine the draft legislative provisions,'' said the Frankfurt-based bank in an opinion issued in recent days.
The ECB also reiterates that member states should try and co-ordinate their guarantee schemes to guarantee a level playing field.
"Taking into account financial stability considerations, a further extension of the ELG scheme would be beneficial.
"Moreover, the ECB understands that the extension of the ELG scheme is safeguarded by the timely compliance of the Irish Government with the EU and International Monetary Fund,'' said the opinion signed off by Mr Draghi.
The ELG scheme is different from the blanket deposit scheme introduced in 2008 covering all retail deposits.
The ELG scheme only guarantees the balance of deposits over the €100,000 limit of the ordinary scheme. Deposits taken out over certain terms are guaranteed up to five years.
The ELG scheme also applies to certain corporate deposits and debt liabilities.