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Tuesday 23 September 2014

Ireland to face twice yearly monitoring despite bailout exit

Published 15/11/2013 | 09:26

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Dutch Finance Minister and Eurogroup chairman Jeroen Dijsselbloem
Dutch Finance Minister and Eurogroup chairman Jeroen Dijsselbloem
European Central Bank (ECB) executive board member Joerg Asmussen addresses reporters during a news conference after his meeting with Greece's Finance Minister Yannis Stournaras in Athens August 21, 2013. REUTERS/John Kolesidis
European Central Bank (ECB) executive board member Joerg Asmussen addresses reporters during a news conference after his meeting with Greece's Finance Minister Yannis Stournaras in Athens August 21, 2013. REUTERS/John Kolesidis

IRELAND's will still face twice yearly monitoring from the troika even though we're leaving the bailout under Eurozone rules for countries leaving programmes.

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Dutch finance minister and chair of the group of Eurozone finance ministers Jeroen Dijsselbloem said last night that Ireland would face "intensive surveillance" twice a year for a period of time, but he said discussions had not yet taken place.

And the exits from the bailouts by Ireland and Spain show that austerity works, despite all the criticism, a senior European Central Bank (ECB) official said this morning.

Ahead of a meeting of Europe's finance ministers in Brussels, ECB Executive Board Member Joerg Asmussen congratulated both countries.

The Government announced yesterday that it would be making a "clean exit" from the bailout, without the help of a so-called precautionary credit line

"In our view it really shows that despite all the criticism the adjustment programmes can work," Mr Asmussen said.

"And the absolute precondition that they can be successful is that you have real ownership of the programme. This is key also for the other programme countries."

Meanwhile, ministers will today discuss the so-called backstops that must be in place ahead of next year's European wide stress tests.

Mr Asmussen said euro zone governments must put in place ways to financially support their banks in case they need more capital as a result of health checks.

If gaps are found on the bank balance sheets, the shortfall will have to be made up, either by bank's private investors or potentially with state support.

ECB chief Mario Draghi has said that he believes a "public backstop" for banks must also be available, although that could mean hitting states for any shortfall.

That piles pressure on Europe's political leaders to either create pools of cash available to help banks or to push back by insisting that the private sector takes any fresh pain.

"From the ECB side we always said it is absolutely necessary that we have credible backstops in place before the whole exercise starts, so we need three layers of backstops, these are first private markets, second domestic budgets or domestic bank rescue funds and the third layer is the European Stability Mechanism (Europe's bailout pot) as it stands," Mr Asmussen said.

By Colm Kelpie in Brussels

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