Seamus Coffey: Forget the bank deal, reducing our deficit is key to Ireland’s future
Ireland will get a deal on bank debt. There is nothing that has happened over the past few weeks that has made this more likely or less likely. The debt burden assumed by the government in bailing out the banks will be changed but it will fall short of the "seismic", "game-changer" description which greeted the June 29 EU summit.
There have been two ways suggested in which changes to Ireland’s bank debt may be possible. Discussions on a restructuring of the Promissory Notes used to prop up Anglo Irish Bank and Irish Nationwide have been ongoing for more than a year now and is the most likely area where a deal will be struck.
After the June EU summit, which promised to break the link between bank debt and sovereign debt, the possibility of Ireland transferring the equity stake in the viable banks to the ESM was mooted. However, there has never been official confirmation at Irish or European level that this can actually happen.