The holders of bank bonds are covered by credit default swaps which insure them against a credit event, ie default, restructuring, debt equity swap.
These financial instruments are sold by insurance companies, hedge funds and investment banks. The funds in these institutions are worth trillions of dollars worldwide.
Hedge funds are unregulated internationally. The investor Warren Buffett has called them financial weapons of mass destruction. The credit default swap market is also unregulated internationally.
As far as is practicable, the Irish state should separate its sovereign debt from the private banking debt. This would enable a credit event to take place in these banks and the holders of bank bonds to cash in their credit default swaps.