Germany’s Bundesbank Says Ireland’s Anglo Deal Is Problematic
Bloomberg has reported that ‘The involvement of the Irish central bank in the nation’s effort to ease the burden of its financial restructuring is problematic, Germany’s Bundesbank said’.
The Irish government announced earlier this month that it will swap so-called promissory notes used to rescue the failed lender Anglo Irish Bank Corp. for long-term bonds with maturities of as long as 40 years. The bonds will be held by the Irish central bank, which can return the interest it receives for the securities to the government.
“The procedure proves the increasingly stronger and more problematic inter-linkage between monetary and fiscal policy in the European monetary union,” the Bundesbank said in its monthly report today. “The European Stability Mechanism, which should be responsible in this regard, has been established to provide any help to individual member states in servicing debt.”
The accord, which the European Central Bank has “taken note” of, will ease Ireland’s borrowing needs over the next decade by 20 billion euros ($27 billion), Irish Prime Minister Enda Kennysaid in parliament on Feb. 7. www.bloomberg.com