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ECB says it will review decision to withhold bailout letter

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The late Brian Lenihan with Brian Cowen

The late Brian Lenihan with Brian Cowen

The late Brian Lenihan with Brian Cowen

THE European Central Bank has signalled that it may release the letter sent to former Finance Minister Brian Lenihan by its then president, which many suspect prompted Ireland's entry into a bailout programme.

The ECB told Fine Gael MEP Sean Kelly that it would review its decision to withhold the letter, which was sent by Jean-Claude Trichet to Mr Lenihan  in November 2010.

Earlier this year, the ECB again refused to hand over the letter, prompting criticism from European ombudsman Emily O'Reilly.

In correspondence to Mr Kelly, the ECB said it was its intention to reassess the matter now that the European banking health checks have been completed.

Mr Kelly said the move was a welcome development in the interests of transparency. "The publication of this letter is also important ahead of the impending banking enquiry," he said.

"Irish people have a right to know the thought processes of key policymakers who took such momentous decisions".

It has been claimed that the letter allegedly reveals that Mr Trichet threatened to pull funding from Ireland's banks unless the government accepted a bailout without burning bondholders.

The ECB has previously said that it believed it was not in the public interest to release the letter. The Department of Finance has also not released it.

The late Mr Lenihan told a BBC Radio 4 documentary that the ECB had threatened him, both verbally and in correspondence, about what would happen if he refused to accept a bailout. He did not provide specifics.

The former ECB chief's role in the bank guarantee has long been controversial, with claims that Irish leaders were effectively railroaded by the ECB into bailing out banks and bondholders here in order to protect the wider euro system. However, he has said the decision to implement the guarantee was taken in Dublin.

Irish Independent