The president of the European Central Bank (ECB), Jean Claude Trichet, said yesterday that Ireland’s sovereign debt and banking crises are not impossible to deal with and he believes the country can overcome its problems .
“My working assumption is that Ireland can do it, Ireland will do it,” he told MEPs in the European Parliament. He stressed that Ireland had to regain its credit worthiness and that the international community had backed the rescue plan.
In a warning to would be bondholder burners he added that the ECB is working off a policy that no eurozone country will default on its debt.
In a separate question, Fine Gael MEP Gay Mitchell suggested that the ECB’s low interest rates during the property bubble fueled Ireland’s problems.
However, Mr. Trichet hit back, hinting that Ireland’s issues were somewhat self-inflicted and in an apparent attack on the economic management of the previous government added that “National policies have to take [interest rates] into account, and to exert appropriate influence to cope with possible difficulties”
“You might say that interest rates were too low for Ireland, (but) they were the interest rates that were appropriate to deliver price stability as a whole.”