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THE CENTRAL BANK has welcomed news of the deal reached between the European Central Bank and the Irish government on the resolution of the IBRC promissory notes.
In a statement this evening the bank said the developments regarding the former Anglo Irish Bank would “contribute to financial stability” by winding down IBRC “in a definitive manner”.
This meant that IBRC would not be reliant on so-called ‘Exceptional Liquidity Arrangements’ (ELA), the ad hoc mechanism by which money had been created and loaned to Anglo Irish Bank and Irish Nationwide.
“The Central Bank will not suffer any losses on its lending to IBRC under ELA arrangements,” it said.
It confirmed that the arrangement – which the Government says will reduce Ireland’s funding requirements by about €20 billion over the next decade – would see the Central Bank “take ownership of the collateral held against the ELA borrowing”.
This refers to the promissory notes, which were created by the Government as collateral to allow Anglo and Irish Nationwide access the emergency funding.
This collateral will be exchanged “for marketable sovereign bonds and government-guaranteed NAMA bonds.”
The Central Bank said the bonds taken on would be sold as soon as possible under the terms of the deal announced today.
Details of the deal provided by the Department of Finance this evening outline that the Central Bank will only sell off €0.5 billion of its new bonds – with a total face value of €25 billion – before the end of 2014, and a maximum of €0.5 billion each year from 2015 to 2018.
Sales will be limited to €1 billion a year from 2019 to 2023, and to €2 billion a year from 2024 onward.
The arrangement means that the Central Bank can only sell on a quarter of its newly-acquired bonds in the next decade – locking in a relatively low interest rate for the Irish Government in doing so.
This is because while the bonds will carry a rough average interest rate of between 3 per cent and 3.5 per cent, the Central Bank will itself borrow the money from the ECB at relatively low rates – currently 0.75 per cent.
The difference between the two rates becomes profit for the Central Bank – which is returned to the Exchequer at the end of the year anyway.
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Oh p**s off Honohan. Just another Yes man! It’s depressing. Anyone who watched last nights events would have witnessed a load of ole drunken backbenchers heckling anyone who spoke. The Dail is a farce. A load of fellas, scooped out of their brains allowed vote on one of the most important nights in our history! This country is a joke!
Diarmuid.
Mind your manners, especially when you’re talking about your betters! If you had a brain a quarter as sharp as the Governor of the Central Bank you might win some respect. This guy knows what he’s talking about and you sir are just lost in the intricacies of the complexities of the issue and so you lash out.
Ha ha, it would take a real smart guy to make that comment about someone he doesn’t even know, can’t remember ever saying he was a thicko either, strange that, you trolls, you do crack me up!
Isn’t it great to hear that the banking sector might now have some stability…….Awww bless ‘em!
How about the rest of us!! .. oh yeah, we’re to be damned
FG my backside! Continuity FF is all yis are…at best
70 years ago, banker equivalents got rifles and shot jews. Each bank now has internal teams of bullies trained to ethnically cleanse the country of everyone who dared to borrow to buy a home at the ridiculous prices developers could get, because those bankers would give huge mortgages to their customers.
it is about time bankers and their unions started to stand up to their bosses and say enough is enough, just as the Gardai have seen fit to do.So long as Irish bank employees are willing to work in a rotten culture, they perpetuate suffering which is not justified.
Bankers, bishops and Nazis exist because of the culture in the organisations and the culture comes from the people in it.
Ah yes, stability(tm). Stretching out the term to repay loans that were never ours.
How about ‘stupidity’? Sounds similar.
How about ‘fraud’?
How about ‘immoral’? How about ‘criminal’?
What happened the gamechanger last June, where Ireland was marked as a special case and we could decouple the banking form the sovereign debt?
Honohan and the government have failed utterly. They did not even ask the for the morally and ethically apt writedown that we deserved for our suffering so far.
A very dodgy overdraft has been converted to a 40 year mortgage guaranteed by our children and grandchildren.
E.C.B = Economic Crisis Beneficiaries.
So the banks think the banks are doing a good job? strange that..
Finally a vehicle by which we benefit from the cheaper Euribor rate for some national debt. Isn’t that the obvious follow on from having a common currency and a common base interest rate? Why should we have had to pay a higher rate to the ECB than other Eurozone members anyway – especially as we were the country that took one for the whole team in 2008?
@ Pat, Ireland did not take one for the rest of Europe back in 2008. That is a total fabrication. The two Brians were fooled into thinking that there was a temporary liquidity problem and that Anglo Irish Bank and Irish Nationwide were of systemic importance.
Alastair Darling, Christine Lagarde and others were appalled.
Ireland acted unilaterally thinking that it was for its own protection and did so with a rash stupidity that has never been equalled.
There are other inaccuracies in what you say.
We have to use our critical faculties and not be beguiled by the good news story.
The only upside is that instead of having to confront this issue in the short term and face our inability to pay, the day of reckoning was deferred in return for a 40 year bullet proof mortgage guaranteed by our children.
Peter,
I agree with everything you say. I did not say we “took one for the team” by design!
So the Central Bank of Ireland has welcomed this. Now we know we were rightly stuffed.
I think its a good deal. Well Done Enda
Haha, good one..
It’s a shame there is so much cynisim about. No it’s not perfect but is a great deal. Well done to the govt in this.
Judging by the comments you can’t make some people happy.
We just saved 20 billion and people are whingeing!
Please explain how we have saved €20 billion?
20 billion has not been saved. That is untrue, incorrect, false and misleading. Yes, that is what the media is saying is the figure saved but it is not actually the case. Even those who are pro the deal are not pretending that 20 billion is shaved off the cost.
We have to stop being so gullible.
Fraud, lies, and more lies, no one prosecuted for the original fraud, liars still in power, and debt is ours plus the interest,
well he’s hardly gonna say anything bad about it why ask ass kissing self serving people like him questions we all know the answer to
Financial Stability = “Our fat pensions are OK”.
This sellout negotiated the original bail out deal and the original prom notes. He will now tell us that this deal will inflate away the debt. Meanwhile he will sit on the ECB governing council making sure there is no inflation!
Did our spineless government and spineless public servants even ASK for Europe to shoulder its responsibility for Anglo being saved? The ECB ordered our government (who spindles sly obeyed) to bail out Anglo. Now that it’s gone all pear shaped they walk away from the mess and our ‘leaders’ let them.
Okay, roll up, roll up. I have three cups. Non watch me put the promissory notes under one of the cups. Which cup? Wrong. I made them disappear.
Now for my next trick, let me show you how I make the country disappear.
Ohh, by the way, let me borrow your wallet and passwords. Trust me.
Is no one taking into account that about 1, 500 also losing there jobs from this. That means another 1, 500 going onto the dole que or leaving the country
I think it’s approx 800 jobs to go in Ireland and the rest in the UK – and to be fair to the employees I doubt they were under any illusions as to the stability of their jobs.
War bonds are debt securities issued by a government for the purpose of financing military operations during times of war. War bonds generate capital for the government and make civilians feel involved in their national militaries. This system is also useful as a means of controlling inflation in such an overstimulated economy by removing money from circulation until hopefully after the war is concluded. At that point, the funds could be liquidated and serve as a stimulus to encourage consumer spending for the economy transitioning to peacetime activity. Exhortations to buy war bonds are often accompanied with appeals to patriotism and conscience. Government-issued war bonds tend to have a yield which is below market value and are often made available in a wide range of denominations to make them affordable to all citizens.
you my friend, are bang on the money.. pun most definitely intended. War is the biggest industry on the planet and these schemes fund such evil. I don’t use that word lightly either. kudos Vinny.
Same Central Bank that got us into this mess!
I feel so comforted by the fact that the huge salaries and astonishingly generous pensions we are paying the Ministers, senior civil servants, CBI and our fountains are wisdom are producing such wonderful results for us.
We are privileged and fortunate.
I am so moved when I see the comments complimenting the Taoiseach and the Government on the great deal they have negotiated.
I see that the greatest friend that Ireland ever had, the European Central Bank, are delighted with themselves for getting Ireland out of an impossible situation.
Now President Obama is going to ask Enda to allow the Irish Nation to take over the US foreign debt.
Paddy is great. Paddy can walk on water.
Why are people calling it a deal, it’s not a deal. The government have screwed the people again big time they have turned a debt that was nothing to do with the people of Ireland into a debt for the people of Ireland, how in god’s name is this a deal.
Unbelievable ,none of us had an account in anglo yet we are expected to pay the bill for their bad decisions.i notice also the propaganda the journal has been feeding us . We think were getting beef with this deal but its really horsemeat .
What a deal!! Nobody loses!!! Everyones a Winner Baby!!! You could write a song about it. As If.
Who’s fiscal stability is more important Euro or Ireland and again Ireland looses out.
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