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A SENIOR official at the ECB has supported calls from the IMF to consider debt relief for homeowners struggling to pay their mortgages.

Joerg Asmussen said recent research by the IMF which claimed that such relief would boost the economy should be looked at "carefully".

But he added: "If you do this type of debt restructuring you need to do it very carefully in order not to have the restructuring too broad."

Mr Asmussen, a member of the powerful six-person executive board at European Central Bank, said household and mortgage debt is a serious issue for Irish banks.

"Irish banks are well capitalised but despite the progress that has been made there is some way to go to have a sound, stable and sustainable banking sector," he said.

The IMF said this week debt relief could boost economic recovery in countries like Ireland and lift house prices.

Its report added: "Bold household debt restructuring programmes can significantly reduce the number of mortgage defaults and foreclosures and substantially reduce debt repayment burdens."

Mr Asmussen, in Dublin to deliver a lecture at the European Affairs Institute, reiterated the ECB's view that Ireland must continue to repay its debts.

"It is key that Ireland honour its commitments and its debts," he told the gathering.


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