News that the Government is in discussions with the EU/ECB/IMF troika about a possible rescheduling of the Anglo promissory notes and the loss-making tracker mortgage books of AIB and Permanent TSB is to be welcomed.
With a further €3.1bn of the Anglo promissory notes due to be repaid this month, the issue of who shoulders the cost of fixing the broken Irish banking system had the potential to poison the fiscal compact referendum debate -- with potentially disastrous consequences for Ireland and the rest of the eurozone.
Ever since the Government stole a march on those opposed to the fiscal compact by calling a referendum last week, it has adamantly denied that there is any link between the treaty and the Anglo promissory notes.
While the Government is no doubt technically correct in making this assertion, there is little doubt but that a deal which lessened the burden of bank losses on the Irish taxpayer would make it much easier to "sell" the fiscal compact to the electorate in the referendum campaign.
In fairness to this Government it has made substantial progress in easing the bailout terms since first coming to office 12 months ago. Last year it successfully negotiated a halving of the interest rate which we pay on the EU portion of the bailout from a penal 5.8pc to just over 3pc.
However, despite this undoubted success, the issue of bank losses, particularly the Anglo promissory notes, continued to rankle.
If this problem had been allowed to fester there is little doubt but that the Government would face an ever more difficult task persuading the Irish people to vote Yes in the referendum.
It seems as if the troika is also aware of the potential difficulties posed by the issue.
Not alone is it in discussions with the Irish Government about a rescheduling of the Anglo promissory notes, the fate of the loss-making tracker mortgage books of AIB and Permanent TSB is also under consideration.
And not a moment too soon. Ever since the previous government unconditionally guaranteed the deposits and bonds of the domestic banks three-and-a-half years ago -- a decision that ultimately cost the Irish taxpayer €63bn and the Irish state its solvency -- it is Irish taxpayers who have been forced to shoulder the entire burden of Irish bank losses.
This allowed the mainland European banks who had so recklessly lent to their Irish counterparts to escape Scot-free.
Such an inherently unfair situation created less than ideal conditions in which to conduct the referendum on the fiscal compact. However, an all-embracing deal on the promissory notes and the tracker mortgages would go a long way to undercutting the arguments of the No campaign.
There is little doubt but that the September 2008 bank guarantee helped prevent wider financial contagion. By so doing Ireland took a hit for the entire eurozone. It's now time for the rest of the single currency bloc to respond in kind.