Friday 25 May 2018

Cypriot bailout changes little for Ireland

Measures taken here and in Cyprus are very different – but both are indicative of the EU's lack of a coherent strategy, says Alan Dukes

THE current bailout arrangements for Cyprus are very different from those for Ireland. Part of the difficulty for both countries is that the eurozone does not yet have a settled system for dealing with the resolution of problems in the banking system.

While a whole series of measures have been put in place, they do not yet, in the fifth year of the crisis, constitute a systematic, logically articulated strategy.

The ECB has pushed the envelope of the permissible under EU treaties. It has flooded the eurozone banking system with liquidity, agreed to accept some arguably dubious securities in the context of refinancing operations, said that it would do "whatever it takes" to ensure currency stability and its decision on 'Outright Monetary Transactions' was adventurous. Even Mario Draghi's delphic statement that the ECB board had "unanimously noted" the Irish arrangement in relation to IBRC promissory notes was adventurous in terms of ECB orthodoxy.

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