Honohan outlines flaws in response to banking crisis

The introduction of the state guarantee of the banks in Sept 2008 limited the options available to government in tackling the banking crisis and helped put unbearable strain on the public finances, Central Bank governor Patrick Honohan believes.

Speaking at a conference in Trinity College Dublin yesterday, Mr Honohan gave his most comprehensive public assessment to date of the causes and the erroneous policy responses to the banking crisis.

Mr Honohan argued that there should have been some sort of burden sharing rather than have the full brunt of the banking losses borne by the Irish taxpayer.