Dr Alan Ahearne: Debt still a huge challenge despite our foreign assets
Did you ever wonder where all the money went? We know that the boom here was funded by borrowing from abroad. Bucketloads of cash was channelled through the banks from savers abroad to Irish residents. Just before the crisis hit in 2008, the stock of foreign borrowing by the Irish banks had soared to €110bn. Only four years earlier, the same figure was at €15bn.
The banks looked abroad for funding because their lending grew so fast that it outpaced growth in domestic deposits. Therefore the funding gap was filled by foreign debt. The banks used these inflows of money from abroad mainly to fund the domestic property market.
The very fact that our banks became so dependent on what turned out to be footloose foreign funding is evidence of a serious failure of banks' management and banking regulation in this country and abroad.