Central Bank Governor Patrick Honohan has said that a widespread debt forgiveness programme would be "unaffordable" for this country.
Speaking at the Limerick Law Society last night, Mr Honohan said that banks should try to come to arrangements with struggling homeowners, without utilising proposed new legislation on personal debt.
The Central Bank was encouraging banks to engage with borrowers, and has increased its monitoring of these efforts, he said.
The bank was also reviewing the guidelines on this issue to see if any elements need to be "refined" to avoid hampering banks' engagement with borrowers.
But he said the number of home repossessions in Ireland is very low, and rightly so.
“In Ireland the number of house repossessions has traditionally been low, and while it has increased in the past two years, in 2011 it still amounted to less than 1% of the number of mortgages,” he said.
“For owner-occupier houses, the traditional Irish reluctance to foreclose is certainly not misplaced.
“There is every reason to play along when it comes to managing a distressed owner-occupier mortgage.”
Mr Honohan also said that banks should be less inhibited about repossessing investment properties from owners who are struggling to repay their debt.