IMF says return to markets dependent on eurozone deal to end 'vicious circle'
COMMITMENTS made at June's meeting of eurozone leaders on banking debt must be implemented to ensure Ireland has regular access to the markets, the IMF's representative in Ireland has said.
Peter Breuer, speaking ahead of the troika's review of Ireland's bailout programme this week, welcomed our return to the bond markets in July but said it came on the back of the June 29 announcement by euro leaders, which focused on breaking the "vicious circle" between sovereign and banking debt.
Mr Breuer made his remarks at an economics conference in Galway, just weeks after the economically powerful states of Germany, Finland and the Netherlands cast doubt on the deal, by stating they believed the summit only agreed the eurozone's bailout pot, the European Stability Mechanism (ESM), would cover future debt and not legacy problems.
Mr Breuer said: "Much of this market access came after the June 29 announcement by the heads of state, so it's important that the commitments that were made then are actually implemented so that market access will in fact manifest itself."
At the Dublin Economics Conference workshop in Galway, Mr Breuer also said that to reduce the uncertainty for investors about the eurozone and to boost confidence, a clear road map for "a more unified union" must be set out.
He said there were two important components to a deeper monetary union -- a banking union and a fiscal union.
Mr Breuer said a unified statement of support for both steps, with a clear timetable, could arrest the decline in confidence engulfing the region.
The second day of the two-day conference in the Ardilaun Hotel also included presentations from the ESRI's Joe Durkan and economist Colm McCarthy. Mr McCarthy said nobody has had the vision to plot a path to the creation of a more robust monetary union.
"There has been no serious thought or energy put in to how do we get from where we are now to day zero of the durable monetary union that will work. And it's a shambles," he said in a panel discussion.
"The European sovereign bond market has been destroyed. And that will cast a long shadow. This is the risk free instrument that is the fulcrum of the financial system, and we've blown it."
Mr Durkan, who in his presentation contrasted the approach of the ECB in the crisis with the US and UK, called for the economic advice being given to politicians to be made available immediately, and for the public not to have to wait for it to be released under the 30 year-rule. He also said he did not believe the eurozone was out of the worst of the crisis.
"I think we have a bit to go yet before the penny drops," he said.