IRISH MOVE DEFENDED:IRELAND WOULD back European Union moves to restore stability to the banking system, Taoiseach Brian Cowen has said
However, Mr Cowen, speaking in Dublin, made it clear he stood by the Government's decision last week to act unilaterally to guarantee Irish-regulated banks.
Despite criticism from some European capitals, led by German chancellor Angela Merkel, Mr Cowen said: "We simply had to respond. We seek to deal with this matter in as co-operative a way as possible, but there are certain issues where our national interests were at stake and we simply had to move."
However, the Taoiseach is keen to avoid unnecessary conflict with fellow EU leaders: "It will require a co-ordinated global response to bring stability, and we will work with our partners, including the European Union, to bring stability to see whether we can get a wider framework for these issues."
Asked specifically about Ms Merkel's reaction, Mr Cowen said: "Look, I think every country and every government is trying to come to terms with the situation as it is developing. We are seeing development by the day. People are reacting and dealing with the situation as they see fit.
"The bottom line from our point of view is that last week's decision is an essential step for us to bring stability to the financial sector in Ireland. We were working within the regulatory rules that were available."
He added: "At the end of the day I stand over the decision that the Irish Government took Monday. I think it was an essential step to take. I don't suggest for one moment that it is the panacea to . . . all our problems, but what it has done is provided, hopefully, and stopped the outflows that were taking place which were putting at risk the whole financial sector."
He went on: "What we have to do as a country is to defend the stability of our own financial system, but, hopefully, at a European level and a wider global level that we can find a means by which this problem is resolved."
He offered a defence of Financial Regulator Pat Neary, who has been the subject of private criticism from within the Government and elsewhere since the crisis erupted.
"In fairness, I think the Financial Regulator and the IFSRA system was a system that was devised in recent years to try and modernise the regulatory framework. I think the challenges that face us now probably require an enhancement of that system and sufficient resources and personnel to monitor on what it happening.
"We build on what is happening at the moment, rather than discard what we have. That would not be a good move at all. There is an institutional memory and expertise that should not be discarded in any way."
On bankers' future pay deals, Mr Cowen said this was first an issue for the banks and their shareholders. But he cautioned: "The public mood would indicate to me that that needs to be revisited in order to maintain public confidence and ensure that the banking sector recognises that the value of the State guarantees that are being provided by the State be reflected in terms by what we expect from now on."
He said credit would be tighter in future. "There is a need to revisit lending practices. The idea that there was a lot of credit available in the past will not be replicated in the immediate future. We are going to have tighter credit criteria. That is obvious because there is a lack of confidence and there is less of it anyway."
