Honohan wants new euro union
CENTRAL Bank Governor Patrick Honohan said that the buck should stop with Europe with regards to regulating Ireland's banks.
A portion of the €17bn provided by Ireland into its banks last year alone, using EU-IMF funds, should have come directly from the European Financial Stability Fund, the governor said.
If this had happened, Ireland's debt sustainability would be much less of a concern to the rating agencies. The governor said steps towards creating a new "European banking union" could kickstart the "growth recovery that is so essential".
Mr Honohan said that the jury was still out on whether the bond purchase plan that the European Central Bank (ECB) adopted two years ago has been a lasting success. He was most concerned about residential mortgages and that the central bank wanted to see lenders to do more to manage significant losses.
The ECB's Securities Markets Programme (SMP) has been kept in hibernation for eight weeks in a row, but is attracting renewed attention as Greek and French elections and worries about Spanish banks stoke tensions.
Honohan said the SMP "cannot be said by any means" to have eliminated cross-country variations in market interest rates that make it harder for monetary policy decisions to have the desired effect throughout the eurozone.