Madam, – The illogical analysis of some European politicians and officials of our banking crisis is worrying.
Fintan O’Toole points out (Opinion, May 3rd) that money provided by French and German banks financed property acquisitions in the UK and now Irish residents are expected to carry the can.
Our regulators and senior government officials have rightly been criticised, but was there not also a flaw at the heart of the EMU? If a number of countries decide to enter monetary union how can such a union work if every country retains its own central bank, even if a super central bank is created at the same time? That is what happened. As far as I can ascertain, the ECB thought the CBI was minding the shop while the CBI thought the ECB was doing so.
Another interesting question is why our government, instead of giving the comprehensive and disastrous banking guarantee, did not redirect our banking chiefs to the European Central Bank when they faced the prospect of a run on the banks in September 2008. The ECB was about setting interest rates and currency value but not about banking regulation?
John Bruton has pointed out that, while some blame for the banking disaster rests with Ireland, European private and public financial institutions are also partly responsible.
European banks and bondholders invested in the Celtic Tiger, presumably at good interest rates, but are now insulated against the negative consequences. Isn’t there something called moral hazard? – Yours, etc,