Madam, – Over recent days, various contributors to the Letters page have referred to negligence on the part of the European Central Bank in respect of the current difficulties being experienced by Irish banks.
This claim has no basis in fact.
The role of the European Central Bank is precisely defined in the Treaties of the European Union. Its primary function is to maintain price stability in the eurozone area. It has no legal competence in relation to the regulation of banks registered in member states.
Similar accusations of negligence have been levelled at banks in other EU member states, in that they “gambled” when investing in senior debt instruments issued by Irish banks.
It is worth nothing that the rate of return offered by Irish banks on these instruments was the same as the rate of return offered on term deposits. If (mainly foreign) institutional investors were “gambling”, then (mainly Irish) depositors were also “gambling”, and both should be prepared to accept the consequences of their actions.
The idea that one group of creditors will happily accept losses while another receives the protection of the State is unlikely to become current any time soon. – Yours, etc,