Chopre: ESM funds should be used to recapitalise Irish banks

European Stability Mechanism (ESM) funds should be used to recapitalise banks, including Irish banks, as part of an EU-wide Banking Union, IMF mission chief to Ireland, Ajai Chopra, told a conference in Dublin.

However, as it stands there is no agreement to use ESM funds to inject capital into the banks. Last year when the Spanish banks needed to be recapitalised to the tune of €100m, funding was provided by the ESM, but via the Spanish government.

Mr Chopra said the IMF preferred the ‘big bang’ solution to a Banking Union, that would see all three elements: a Single Supervisory Mechanism (SSM); a Single Resolution Mechanism and a common backstop including deposit insurance for all banks, created in one legislative push.