Debt crisis - Paying all creditors will not work

The stress tests were only about the amount of money ultimately needed to facilitate the bank bailout, but the next issue is where to get the money.

During the election campaign both Fine Gael and Labour indicated they would try to ensure that senior bondholders would share in the burden of the banking loses.

Mohamed El-Erian, chief executive of PIMCO, which manages the world biggest bond fund with investments worth more than $1.2 trillion, warned in an interview with Bloomberg TV on Thursday that the strategy of paying back all one’s creditors in a debt crisis has not worked throughout history and will not work in Ireland’s case. He added that while the International Monetary Fund and the European Union were doing their part, Irish taxpayers were “doing more than their fair share”.