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Trichet rejects Honohan insurance plan

ECB governor Jean Claude Trichet has shot down suggestions from the governor of Ireland's Central Bank, Patrick Honohan, that a risk-insurance scheme could be put in place for Irish banks, which would involve Europe and the International Monetary Fund guaranteeing potential bank losses.

During the press conference that traditionally follows the interest-rate announcement from the European Central Bank, Ireland featured several times yesterday. Both Irish and foreign reporters wanted to find out what the ECB expects to happen here next.

"We have a programme," said Mr Trichet with his trademark Gallic gruffness. "And I said that the governing council was welcoming in the programme. So I will not embark in a discussion on that programme."

Mr Trichet also denied suggestions that Ireland had been forced to take the €85bn bailout.

"It goes without saying that it's been the decision of the Government of Ireland and that all those who have discussed with the Government of Ireland concluded that it was necessary, of course, to engage in this adjustment programme."


The Frenchman insisted that the programme was working but suggested that the Government may yet need to do more.

"We consider that it contains the necessary elements to bring about sustainable stabilisation of the Irish economy. We encourage Ireland to take any further measures necessary to achieve the objectives of the programme."

He declined to comment on the political situation here as members of the Fianna Fail parliamentary party held a meeting with Brian Cowen, during which the Taoiseach admitted that there were issues surrounding his leadership.

Asked whether Ireland's bailout was enough to change the market's poor view of the country, the ECB governor said there were never "sharp and abrupt changes in the attitude of the investors and savers" to countries.

"They (investors) have to be progressively convinced. So I am confident in the fact that the authorities that are in charge will progressively convince the observers, savers and market participants," he said.

Asked by Brian Blackstone of the 'Wall Street Journal' about emergency lending to the Central Bank here, Mr Trichet was less forthcoming, responding tersely that the ECB has a "doctrine for ELA (emergency lending assistance). And I have nothing to add to that."

Irish Independent