European Commission approves extension of Bank Guarantee

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The European Commission has just announced that it has approved the extension of the Bank Guarantee until June 30th of next year (2011). The European Commission has said it deems the guarantee to be an "adequate" means to "remedy a serious disturbance in the Irish economy".

State aid: Commission approves prolongation of the Irish guarantee scheme for credit institutions

The European Commission has approved until 30 June 2011 the prolongation of guarantees for credit institutions in Ireland, covering also certain short-term liabilities (see IP/10/1154).

The Commission considers the extension of the measures to be in line with its guidance on support measures for banks during the financial crisis (see IP/08/1495 and IP/08/1901). The extended measures are well targeted, proportionate and limited in time and scope.

The Commission, therefore, concluded that the guarantees are an adequate means to remedy a serious disturbance in the Irish economy and is as such compatible with Article 107(3)(b) of the EU Treaty.
- European Commission Statement

The Irish Times reported this morning (you can read the Politics.ie discussion on it here) that the guarantee was expected to be approved by the European Commission today.
 


Sensible Head

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Should this read ..

EU approves keeping the doors open so more taxpayers money can be shoveled in and posted off to the germans ? ;)
 

selkies

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The European Commission has just announced that it has approved the extension of the Bank Guarantee until June 30th of next year (2011). The European Commission has said it deems the guarantee to be an "adequate" means to "remedy a serious disturbance in the Irish economy".

- European Commission Statement

The Irish Times reported this morning (you can read the Politics.ie discussion on it here) that the guarantee was expected to be approved by the European Commission today.
Ha! that goes completely against what that doom sayer came out with on bloomburg.
I always enjoy it when the pessimists get it so wrong.
It calls into question almost everything they are saying

http://www.politics.ie/economy/142226-ireland-bankrupt-we-just-have-60-days-money-left.html

Yes things are going very badly, but only relative to how awesome there were before and it is no cause for the mass hysteria.
 
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Statement from the Department of Finance welcoming the decision by the European Commission to approve the extention of the guarantee.

Minister welcomes approval for the bank guarantee

The Minister for Finance, Mr Brian Lenihan TD, today welcomed EU state aid approval for the extension of the Credit Institutions (Eligible Liabilities Guarantee) Scheme (the ‘ELG Scheme’)

On the advice of the Governor of the Central Bank, the Minister proposes to extend the issuance period of the Scheme beyond the current end date of 31 December 2010 and will be placing a Statutory Instrument before the House shortly which will enable the issuance period to extend to 31 December 2011 subject to six-monthly State aid approval by the European Commission.

The Minister for Finance said:

“The European Commission today announced the approval of the Scheme under State aid rules to 30 June 2011 which is the maximum period permitted for state aid approval under the European Commission’s policy on guarantee schemes in the financial sector.

Today’s announcement is a most welcome development and will underpin the Government’s efforts to restore the financial system and support the funding position of the participating institutions in the Guarantee scheme. The Government is determined to rebuild consumer and investor confidence in our financial system which has an important role to play in ensuring businesses, and notably SMEs, can invest for growth.

The approach has now received the endorsement of both the European Commission and the ECB.”

The extension announced today applies to all liabilities covered under the existing ELG scheme including both short term and long term bank liabilities.

The relevant State authorities had been closely monitoring the funding situation of Irish banks and the requirement for the continuation of the guarantee beyond the end-year issuance period, to underpin the core principles of financial stability and funding access for the financial institutions.

The Commission approval follows closely on from the recent legal opinion from ECB dated 2 November 2010 which endorsed the extension to 31 December 2011 on financial stability grounds.

This is an important support to the Irish banking system and complements the broad Government Strategy to restore fully the banking system and maximise its contribution to overall economic recovery.
 

selkies

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Right or wrong this allows for more confidence in the Irish economy.

I mean the EU don't want Ireland to go bust because it will effect the euro, and they are expressing confidence in the decision on the Irish government, a decision that happened before it became clear that the germans say jump, we should say how high
 

Indy-pendant

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locke

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Right or wrong this allows for more confidence in the Irish economy.

I mean the EU don't want Ireland to go bust because it will effect the euro, and they are expressing confidence in the decision on the Irish government, a decision that happened before it became clear that the germans say jump, we should say how high
All that they have said is that they fit the rules, not that they have confidence in the decision.

To be honest, this can't give any confidence in the Irish economy. It increases the chance of default and reduces the chance of a successful bond auction. To create confidence, we need to decouple the state's finances from those of the banks.
 


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