Mario Draghi won't answer questions at Bank Inquiry
The European Central Bank (ECB) will not participate directly in the upcoming Banking Inquiry, its president Mario Draghi confirmed yesterday.
At a meeting in Brussels the ECB chief also insisted that the so-called Trichet letter did not force Ireland into the 2010 EU/IMF bailout.
The letter, sent by Mr Draghi's predecessor Jean-Claude Trichet to the late Brian Lenihan in November 2010, was finally published this month.
It controversially includes a strongly worded insistence that Ireland seek a bailout, and stand behind loans owed by banks here to the ECB at the risk of seeing liquidity to Irish lenders being cut off.
In his reply the then Finance Minister Brian Lenihan agreed to accept the terms of the EU/IMF bailout.
But Mr Draghi said the letter was not the cause of the 2010 bailout.
Several factors, not the Trichet letter, triggered what Mr Draghi called the request for assistance by Ireland in 2010.
By November 2010 the situation in Ireland had deteriorated rapidly and the ECB's Governing Council had a duty to address that issue, he said.
A quarter of all liquidity provided by the ECB to Euro area banks at that stage was to lenders in Ireland, he said.
He was speaking in Brussels at the European Parliament's Economic and Finance Committee, where the ECB president regularly appears to answer questions from MEPs.
Mr Draghi also effectively ruled out his own, or any of his senior officials', appearance in front of the upcoming Oireachtas Banking Inquiry.
"We will not formally participate in a national parliament's inquiry," he said.
The ECB has not yet decided on what level of what he described as any "informal participation" it will engage in, he told MEPs.
Fine Gael MEP Brian Hayes said last night that the ECB should hand over documents to the Banking Inquiry.
"I made it clear that the ECB's engagement should involve the delivery of key ECB documentation from the period of 2008-2010 when Ireland's banking crisis occurred," he said last night.
The ECB exposed itself to Ireland between 2008 and 2010 and should be held to account for its actions, he said.
The head of the Central Bank of Ireland, Patrick Honohan, is likely to be called by the Banking I nquiry.
Famously, the Central Bank Governor gave an interview on RTE's 'Morning Ireland' in the run up to the arrival of the EU/IMF outlining the need for a bailout.
Like other Central Bank governors he sat on the board of the ECB at the time of the financial crisis, and would have been aware of, and involved in discussions in relation to emergency loans to Irish banks.
In what many observers here will see as an ironic twist, Mr Draghi defended the ECB's increasingly loose monetary policies, saying it had never lost money making loans to a Euro area bank and would continue to keeping credit flowing to lenders.
"Restricting banks' access to liquidity would increase the risk for the central bank's balance sheet rather than protecting it," he said.
But he said Governments need to do more to pull the economy out of its malaise, including so called "structural reforms" within member states.
Earlier this month the release of letters between former ECB president Jean-Claude Trichet to then-Finance Minister Brian Lenihan gave a fresh insight into the build-up to the bailout in late 2010.
The letters, which include the threat to cut off funds if Ireland did not apply for a bailout, drew fresh calls for the Frankfurt-based ECB to send representatives to the imminent banking inquiry.
Mr Trichet, who directly dealt with the issue, has already indicated that he will refuse to come here to answer questions from TDs and Senators.
And yesterday's statements by the current ECB president effectively end any likelihood that current senior officials at the bank will travel to Ireland to answer questions at the Oireachtas banking inquiry when it begins hearing evidence.