Wednesday 13 November 2019

Little love lost as European Court rules out future bailouts by bank

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Former ECB President Jean-Claude Trichet.
Former ECB President Jean-Claude Trichet.

Thomas Molloy

The European Central Bank's apparent change of heart over appearing at the banking inquiry comes at an interesting moment in its brief history.

As officials in Frankfurt weigh the pros and cons of appearing before the Dail committee, the European Court of Justice in Luxembourg ruled yesterday that the ECB should not take part in any future bailouts - like the one that saved or destroyed this country, depending on your point of view.

That would leave just the International Monetary Fund and the European Commission responsible for future bailouts.

The reasons behind the decision are complex, and have nothing to do with the ECB's past performance, but the decision will inevitably leave many thinking of what might have been.

Those who blame former ECB president Jean-Claude Trichet for the bailout of our banks will rub their hands. For them, Mr Trichet made a bad situation worse by pushing the late Brian Lenihan to repay bondholders.

While no country seems to revile the ECB with quite the gusto of the Irish, there is little love for the bank in Cyprus or indeed Spain and Italy, where some believe Mr Trichet over-stepped his mandate by insisting on financial reforms from those countries even though they had not received a bailout from the central bank.

Not everybody will be happy, of course. There are those who believe that the ECB's decision to pump tens of billions into our banks through the little understood Emergency Liquidity Assistance programme aided Ireland at a time when there was little political will overseas to help.

There will also be those who believe that the ECB's insistence on austerity was not misplaced.

Finally, there will be those who know that the ECB charged this country much less to borrow than the Washington-based IMF, which must charge the same rate to all countries getting a bailout.

Whatever your view, one thing looks certain - the days of the Troika are over.

Irish Independent

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