Promissory notes deal secure, says Mitchell

The Government last night insisted the deal on the promissory note would not unravel, despite a day of claim and counterclaim in Europe and concerns being raised by the head of the German Bundesbank.

Jens Weidman told the Bloomberg news agency that the Irish deal “blurs the clear line between monetary and fiscal issues”, and ECB president Mario Draghi later said the opportunity had “not necessarily” passed for objections to the deal and added: “If it does not [comply], we will see what legal remedial action needs to be taken.”

However, the Government moved to ease fears over the future of the deal, with Fine Gael MEP Gay Mitchell saying Mr Draghi was supportive of the arrangement, stating: “This deal will not unravel.”

However, Fianna Fáil said answers were needed to the “unanswered question” of how long the Central Bank will be allowed to hold the government bonds generated to replace the notes — and whether the ECB may force the release of the bonds into the market “at a more accelerated pace”.

In the European Parliament, Mr Mitchell asked Mr Draghi directly if there had been any material change in the ECB’s position on the deal.

Indicating that the position had not changed, Mr Draghi said the ECB “took note and that’s it”. Mr Draghi said the ECB can still assess the compliance of the deal to existing treaties and if there was a question over that they can assess it at the end of the year and take remedial legal action.

Speaking on RTÉ radio, Mr Mitchell said: “Mr Draghi is in our corner and will do everything to help.” On Mr Draghi’s obliquereferences to the future of the deal, Mr Mitchell said: “He is going to keep all his cards to his chest because he is president of the ECB.”

He added the Bundesbank concerns related to Article 123 of the deal — which prohibits the ECB financing governments.

Independent MEP Marian Harkin said Mr Draghi’s comments had “cast a dark shadow” on the deal, while Sinn Féin’s finance spokesman Pearse Doherty warned: “By forcing Ireland to dump its bonds early the ECB would be forcing Ireland into a situation worse than before this month’s deal. This now appears to be a real possibility.”