ECB-forced 'run on our banks' led to bailout
Frankfurt's 'murky role' in bailout must be explored says McCarthy
Economist Colm McCarthy has said that there are "widespread suspicions" that the European Central Bank fostered a run on Irish banks to force the last Government to seek a bailout from the EU-IMF.
In the Sunday Independent today (below and page 23), Mr McCarthy says that the ECB behaved in a "bullying fashion" towards Ireland by threatening to withdraw liquidity support and "fostering" a run on the banks.
Mr McCarthy also said that any further inquiry into the banking crisis in Ireland should explore the "murky role" of the ECB in events leading up to the exit of Ireland from financial markets and resort to EU-IMF financing in November 2010.
His comments follow the publication of a quite sensational account by former Finance Minister Brian Lenihan in which he claims that the ECB forced Ireland into the bailout.
In an interview to be broadcast on BBC Radio 4 today, Mr Lenihan has also accused members of the ECB executive of "betrayal". He criticises some ECB governing board members for the "damaging" manner in which they briefed some media about Ireland.
But the state secretary at the German finance ministry, Jorg Asmussen, told BBC Radio 4: "It was made very clear to the Irish Finance Minister that it was not just about Ireland. The functioning of the currency union was at stake."
It emerges in the programme that when EU finance ministers met in Brussels on Tuesday, November 16, the German finance minister, Wolfgang Schauble, pressed Mr Lenihan to hold a press conference immediately after the meeting to announce an application for aid.
Mr Lenihan responded: "I refused and said I wouldn't participate on that basis; that my Government had the sovereign right to decide how it conducted these discussions."
Mr McCarthy, an economist at UCD, has said the Government should now consider publishing full records of ECB communications with the Irish authorities throughout the affair. "It is high time, too, for automatic publication of ECB council minutes," he said.
A report on the BBC programme, published by the Irish Times yesterday, is re-published in full in the Sunday Independent today on page 20. It sheds significant new light on the traumatic events which led the Government to request assistance from the EU-IMF.
The "widespread suspicions" to which Mr McCarthy refers were commented upon by an Irish academic, Professor Gary O'Callaghan, of Dubrovnik International University, in February in a paper entitled: 'Did the ECB cause a run on the Irish Banks?'
Source: Irish Independent, 24 April 2011
