The problems in Ireland leading up to the crisis were twofold – linked to financial markets and to politics. And by guaranteeing banks’ debts, all EU governments risked their credibility and ultimately their solvency. Since the bank guarantee decision of 29 September 2008, debate continues to rage as to the role it played in Ireland’s financial and economic crisis. To many, the guarantee was a fatal error that led to a ballooning of Ireland’s debt and imposed huge costs on the voters and tax payers for years to come.
There are serious legal, political, and ethical questions that must be asked about how the ECB has behaved during the Eurozone crisis. There remain many serious challenges to Ireland and the Eurozone, not least a sceptical public, populist political parties and constitutional hurdles such as the German Constitutional Court ruling on the ECB’s Outright Mechanism Transactions programme. There will be the need for Irish policymakers to consider a more constructive and pro-active solution for Ireland’s difficult situation and to consider sovereign debt restructuring which may be undesirable but unavoidable.
