PARIS (MNI) – The new government of Ireland is hoping to secure
special medium-term financing from the European Central Bank in order to
overcome its banking crisis, the Financial Times reported over the
weekend.
Citing Irish radio, the FT reported that Irish prime minister Enda
Kenny said Friday that talks had begun with the ECB about ways that
Irish banks could be financed as they restructure.
Ireland’s banking sector already has about E100 billion in
outstanding loans from the ECB in unlimited, fixed-rate refinancing
operations with maturities of up to three months. It also has another
E70 billion in emergency lending assistance from the Irish central bank.
According to the Financial Times, Kenny told an Irish radio station
that, “emergency funding is obviously critical, but medium-term to
longer-term funding would be much more stable and, obviously, would give
a greater degree of credibility to the markets.” He added: “That’s a
case of dealing with the European Central Bank.”
The ECB has been saying for months that it is trying to find a way
to wean troubled banks, primarily in the Eurozone’s peripheral
countries, off of its emergency fixed rate, unlimited refinancing
operations so that it can wind those operations down. A special side
deal for longer-term financing with an individual country, outside of
the central bank’s refinancing operations, could conceivably serve as a
model for accomplishing that objective.
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