Europe ‘had a role in bank crisis’

The Irish banking crisis was caused by too much borrowing and poor supervision combined with reckless lending by European banks, according to Christine Lagarde, managing director of the IMF.

Her statement directly contradicts the position of the German finance minister, Wolfgang Schäuble. In a recent interview he said the responsibility of absorbing the Irish bank losses lay with the Government because the crisis was caused by domestic factors.

The State has had to pump €64bn into bailing out the banking system. The Government is looking for debt relief through the ESM taking stakes in the domestics banks. However, the creditor countries are opposed to such a move.