Private Bank Debts and Public Finances: Some Options for Ireland
Notice: A further version of this paper will be prepared to reflect changes arising from the Government-ECB statements of 6-7 February 2013
This paper explores the issue of banking debt and its relationship to public finances. The context is set by the huge and disproportionate weight of socialised private debt on Irish public finances together with the lack of progress in relation to the signals made in regard to Ireland's position from the EU summit in June 2012. The paper is organised around four questions:
- What is the total amount of 'socialised' banking debt in Ireland and what are its components?
- What options are technically and politically feasible for a re-structuring of banking debt?
- What would an optimal or fair resolution look like?
How big difference could a deal on bank debt make to public finances in Ireland?
Progress is required in relation to adjustments to the total amount owed, the length of period over which repayments are made and the interest rate charged on borrowing to repay the debt. The paper argues that the option of suspending payment, pending satisfactory negotiated outcomes, on the next amount owed on 31st March should not be excluded at this point especially in the context of little apparent progress in relation to the matter.
Keywords : Banking, General Government Debt, Promissory Notes.
A presentation given on 6th February 2013 can be view below and the slides are available from here .