Call for probe into ECB’s role rejected

CALLS for an investigation into the European Central Bank’s alleged role in helping fuel Ireland’s banking crisis with cheap credit have been rejected by sources close to the bank.

Two government ministers this week said the ECB had a role to play in facilitating Ireland’s banking crisis and that any bank inquiry needed to take account of this.

But sources close to the ECB yesterday said the allegation was “absolute nonsense” and that it was unlikely Frankfurt, where the bank is based, would cooperate with any Irish inquiry. “The framework for the monetary union is the same for all countries. If the allegation is that we did one thing with one country, that doesn’t make sense as it is a single currency for all 17 euro members. The monetary policy is a single policy. All policies are directed to all [countries] and cannot take into account national factors. It’s impossible to allege this. It’s absolutely nonsense. You can’t have just one rate for Ireland, it’s the same for all countries,” said the source.

Any investigation into the ECB’s business would also have to be brought through the European Court of Justice, the source added.

The defence of the ECB comes after damning comments made by two senior Labour ministers this week.

Social Protection Minister Joan Burton, during a Dáil debate on the Nyberg banking report on Tuesday, initially called for the investigation into the ECB’s role. She moved the focus of blame onto the ECB and the low interest rates it presided over during the boom, which enabled Irish banks to get huge amounts of money cheaply to lend. The minister likened the ECB to a “briber” in Ireland’s boom years, when she said: “Just as the person who takes a bribe is responsible for taking a bribe, the briber also has a responsibility.”

Her suggestion was also backed by fellow party minister Pat Rabbitte.

Speaking on TV3’s Tonight with Vincent Browne the same night, the Communications Minister said: “The ECB cannot wipe its hands or wash its hands of responsibility for what happened.”

Asked if the ECB had in some way been “bribing” Irish banks, he replied: “That’s exactly what was happening, wasn’t it.”

Ireland’s Central Bank refused to comment on the ministers’ claims yesterday.