ECB to scrutinise Irish debt levels

The European Central Bank has indicated it will closely monitor the Central Bank of Ireland’s holdings of government debt in the wake of the deal to restructure the debts of Anglo Irish Bank.

The pledge from ECB chief Mario Draghi to keep the arrangement under surveillance comes amid anxiety in Germany’s Bundesbank that the pact comes dangerously close to the illegal printing of money for the Government, a practice known as monetary financing.

Although the Coalition has made light of claims that the deal is under threat, Mr Draghi’s remarks led Fianna Fáil to warn that the financial benefits might be watered down.

Government bonds were issued to the Central Bank of Ireland to replace Anglo promissory notes on the understanding that the national Central Bank would sell the bonds to market investors as soon as possible.

“Crucial in the future will be the disposal policy by the Central Bank of Ireland of these bonds,” Mr Draghi told MEPs.

Irish Times

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