Thursday 22 June 2017

European Central Bank refuses to disclose 'top secret' amount of Irish debt

Daniel McConnell CHIEF REPORTER

THE European Central Bank (ECB) has refused to clarify how much Irish debt it is currently holding because the issue is "top secret".

Despite the downgrade by Standard and Poor's of Ireland's credit rating, the NTMA has said that the ECB was not involved in last Wednesday's auction of government debt, but questions have been raised over the propping up of Ireland by Frankfurt.

The amount of debt held by the ECB is said to be less than €10bn, but the Sunday Independent was told that the official amount can't be revealed because the ECB's dealings are "top secret".

Earlier this month, the ECB bought Irish government debt in an effort to halt a marked slide in its price. The purchase of government bonds by the ECB was one of the emergency measures introduced in early May to stem the eurozone debt crisis, which culminated in the bailing out of Greece.

ANALYSIS PAGE 32

Such measures are highly unorthodox and have caused open divisions among the 16-member bloc's central bankers. The cost of Irish borrowing was 344 basis points over Germany.

"Rabid" investors are concerned about the ever-increasing cost of the banking bailout and as the bank guarantee deadline approaches, Ireland will again be under the spotlight. Finance Minister Brian Lenihan has said he wants to wean the banks off the guarantee, but it is likely it will be extended until the end of the year.

Sentiment within many of Europe's leading financial houses toward Ireland has deteriorated significantly and Ireland's "first-mover advantage" in terms of its austerity programme has dried up.

Although the ECB has had a remit since May to buy government debt, it can only do so in the secondary market, where previously issued instruments are subsequently traded among those who hold them. The ECB is prohibited from purchasing debt directly from governments.

Sunday Independent

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