Today, I’m giving a presentation titled “Ireland’s Bank Debt and What Can be Done About It” at the IIEA’s conference Exiting the Crisis. The slides from my talk are available here as a PowerPoint slideshow and here in PDF.
The presentation is based on this earlier blog post, though I think that post failed to emphasise enough that I prefer a restructuring of the promissory notes within the current ELA arrangement to replacing ELA with a loan from the ESM.
The slides were prepared prior to today’s EU banking announcement but are, if anything, more rather than less relevant as the summit did actually make some progress towards EU risk-sharing in relation to bank recapitalisation costs.
Despite this morning’s euphoric claims from Enda Kenny and Eamon Gilmore that this is a “seismic change” and a “deal changer”, I would recommend serious caution. Ireland’s bank debt is a complex sui generis issue and its resolution will not fit easily into the tools the EU is now developing to deal with banks elsewhere. There is lots of negotiating still to be done and premature celebrations can be counter-productive.