ECB claims rescue programme ‘will bring stability’ to Ireland’s finances

IRELAND’S rescue programme is a good one and will bring stabilisation to the country, according to the European Central Bank (ECB).

As the bank kept its interest rate at record low figures yesterday, ECB president Jean-Claude Trichet said the bank would continue its bond-buying programme.

Mr Trichet said Ireland’s rescue plan addresses “in a decisive manner” the economic and financial causes underlying current market concerns, adding that it will contribute to restoring confidence and safeguarding financial stability in the euro area.

Mr Trichet said that it was the Government’s decision, when asked if the ECB forced Ireland into accepting the rescue package.

He said they had discussed the plan with outside parties and they all had concluded that it was “necessary to engage in this adjustment”.

Borrowing by Irish banks from the Central Bank in Dublin under emergency lending assistance was an “ongoing concept”, he said.

The ECB bought Irish and Portuguese government bonds yesterday, and the bank extended an emergency loan programme to combat “acute” market tensions.

Mr Trichet said he would continue to provide banks with unlimited liquidity well into next year. However, he made no commitment to increase the pace of bond-buying through the ECB’s ongoing Securities Market Programme (SMP).

Yesterday ECB Governing Council member Axel Weber said the aid package for Ireland will lead to a “sustainable” improvement of the country’s situation. The financial support will also contribute to a “turnaround” of indicators, Mr Weber said.

Economic adviser with Ernst & Young, Marie Diron said: “The Irish crisis has highlighted the fragility of the eurozone economy and the need for monetary policy makers to use all weapons available to buffer the negative impacts. This decision was still uncertain as recently as a few weeks ago. But the developments in Ireland have undoubtedly shifted the balance of views within the Governing Council towards a more prudent approach to the exit strategy.”

German lawmakers yesterday backed the country’s contribution to the €85 billion bailout.

Yesterday Irish shares closed up 2.1% with banking shares reporting a mixed day. AIB closed down 0.3% to 0.34 cent, Bank of Ireland closed up 1.3% to 0.32c. Irish Life and Permanent also closed 1.3% higher at €1.04.