Monday 29 December 2014

No deal tonight: ECB wants more time

Tom Molloy

Published 06/02/2013 | 16:41

Finance minister Michael Noonan
Finance minister Michael Noonan

EUROPEAN Central Bank leaders decided tonight that they want more time to consider a proposal presented by Ireland today to restructure the cost of the promissory notes, sources said.

A decision is unlikely within the next 24 hours as some members of the ECB’s governing council want to discuss the blueprint with their own central banks first, reports added.

The delay comes after a day of high drama which saw the Government call back President Michael D Higgins from Italy and warn Dail deputies that an emergency debate could be held later this evening.

The government was clearly hoping that the ECB governors would agree to its latest plan at the Frankfurt - a hope that proved to be overly optimistic.

Some central bank governors are concerned that the government's proposals could set a precedent in the euro area and needs to be weighed

carefully, the person said.   

A spokeswoman for the ECB in Frankfurt said that the talks are ongoing, and declined to comment further.

It is understood any deal will encompass the replacement of the promissory note with a basket of bonds averaging over 33-34 years.

It also includes the liquidation of the former Anglo Irish Bank and the assets being taken over by NAMA and Central Bank.

Sources familiar with the process say the repayment of the bonds coming due over 33 to 34 years will result in substantial savings.

The real value of the bonds will reduce with inflation over time. 

The coalition, headed up by Finance Minister Michael Noonan, has been battling with European leaders and officials in Brussels and Frankfurt since taking power in early 2011 to cut the cost of the country's bank bailout.

The Government has been in long-running talks to cancel a repayment scheme of €3.1bn a year until 2023 for so-called promissory notes - a mechanism devised to refinance Anglo using money from the Central Bank of Ireland but without breaching strict bank funding rules.

The latest instalment was due at the end of the month.

The bank bailout cost about €64bn.

 

 

 

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