Blanket bank guarantee was to avoid ECB and market scrutiny

In yesterday’s Sunday Tribune Jon Ihle give an account why the blanket guarantee was “solved before it entered the public domain” according to recent documents realised by the Department of finance. He explains that “a "comprehensive guarantee would be necessary" for the Central Bank to step in with emergency liquidity assistance (ELA) to help Ireland's ailing banks”. The paper in question when on to specify that “It is in the interests of the public that the situation is solved before it enters the public domain in order to prevent contagion”.

The government has come in for some just criticism in the recent past but I believe that in this case it may have saved the economy not telling the public. Since this time there has been a complete lack of consumer confidence, which is restricting our economic recovery on a domestic front. As a nation we are leading an export led recovery at a stage when Irish savings are at record highs. I also believe the government did not know the extent of our debt in 2008 and as a result I would be hard fought to blame our government for their action on this particular issue.
This argument is put forward in the article as it is explained that the government's preparations were to "help support public confidence" in the banks, but feared openness could jeopardise financial stability. However the papers indicate that Central Bank officials wanted recourse to the public purse before providing help, as the European Central Bank could have prohibited emergency funding if it was deemed to interfere with monetary policy.

Inally it outlines that European finance ministers in October 2007 and referenced in the Department of Finance documents, which said creditors and uninsured depositors "should expect to face losses" in a bank failure. I believe that if the savings of the country were burned and the Irish people had lost life savings we as a country would have failed our patriotic duty to protect the innocent hard working people of the island of Ireland. I don’t think our government have showered themselves in glory in the past but I think they acted competently in this case.

http://www.tribune.ie/business/article/2011/jan/30/blanket-bank-guarantee-was-to-avoid-ecb-and-market/