Minister for Finance Michael Noonan has insisted he was not threatened by the former president of the European Central Bank, but his predecessor Brian Lenihan might have been.

Mr Noonan was reacting Social Democrats TD Stephen Donnelly’s claim that the Minister had misled the Dáil on Jean-Claude Trichet’s attitude to Ireland burning bondholders.

Mr Donnelly had called on Mr Noonan to resign. He said the Government had been elected on a clear mandate to burn the bondholders.

“It appeared, it tried, was threatened and made a certain decision. If the Minister for Finance feels he can walk into the House and deny those threats were ever made, we have a serious question,” said Mr Donnelly.

In Limerick on Friday Mr Noonan said “Stephen Donnelly is a poor attender in the Dáil and he doesn’t attend committees so he doesn’t have a full picture of what goes on quite frequently.”

Trichet ‘prediction’

He added: “What I said in the Dáil I said again when I gave four hours of evidence before the banking inquiry. Mr Trichet did not threaten me but if Mr Trichet, as he did say, said: ‘a bomb will go off in Dublin’, that’s a prediction. If on the other hand Mr Trichet said that the European Central Bank will make sure that a bomb goes off in Dublin, that’s a threat.

“But . . . he was predicting that if we burn the bondholders that the international markets would react in a way which would be of high risk to Ireland . . . he made no specific threat to me.

“On the other hand I did see correspondence where he seemed to be threatening Brian Lenihan with pulling back emergency liquidity assistance to the banks if the bonds were burned back in 2010 and I presume it was that that caused the committee of inquiry to say that he threatened.”

When asked about the €2.5 million reserve fund, Mr Noonan replied that it reflected an improved economy and was a “modest forecast” in comparison to the Central Bank’s projections.

“The Central banks has predicted higher growth rates for the next two years than the Department of Finance so it seems to me the experts say there will be no shock this side of 2018 anyway. And its from then on that we need to have a fund in place,” he said.