Banks must be forced to support the economy
A strong policy, even 18 months too late, can pave the way for a return to sane commercial banking, writes Alan Ruddock
Published 07/03/2010 | 05:00
Eighteen months after Ireland's banking crisis erupted, and more than a year after Anglo Irish Bank was nationalised, the Government is finally preparing a "comprehensive statement" on the restructuring of the banking system.
The rest of the world has moved on, but Ireland still edges towards a statement of intent from government about a banking system that is mired in multi-billion losses and which now proposes to ratchet up the cost of borrowing so that it can claw its way back to profitability at the expense of the rest of the economy.
Only in Ireland would low interest rates, designed by the European Central Bank to help struggling economies recover, be used instead as an opportunity for banks to charge ever higher margins: a policy that is meant to stimulate the economy is turned on its head to become an instrument of oppression.