Ireland’s bank guarantee was justifiable, claims Trichet

Ex-ECB chief denies previously describing Irish government’s decision as a mistake

Jean Claude Trichet the ECB’s message to Dublin was the same as the message of the central bank to Belgium, to Germany, to France.

Jean Claude Trichet the ECB’s message to Dublin was the same as the message of the central bank to Belgium, to Germany, to France.

Tue, Jan 14, 2014, 20:34

Former head of the European Central Bank, Jean Claude Trichet, has said Ireland’s decision to guarantee its banks was “justifiable”, denying he previously described the decision as a mistake.

Addressing the economic and monetary affairs committee of the European Parliament in Strasbourg yesterday, ahead of the committee’s visit to Dublin tomorrow, the Frenchman who was at the ECB helm during Ireland’s bailout, said the decision was made by the Irish government and was “justifiable given the situation it found itself [in]”.

“The decision was taken by the government and probably rightly so,” he said.

Asked by MEP Gay Mitchell about the ECB’s role in the decision, Mr Trichet said the bank’s message to Dublin was “the same as the message of the central bank to Belgium, to Germany, to France, ” that “we were at the heart of the crisis, saying clearly to beware as we know what could happen”.

Mr Trichet appeared before parliament’s Econ committee today as part of an inquiry into the workings of the troika, following an appearance by EU commissioner Olli Rehn yesterday.

Both men defended the practices of the troika, arguing the gravity of the euro zone crisis required a swift response. “The [bailout] programmes did not mark the beginning of the crisis, but a start of its resolution,” Mr Rehn told members of the committee last night.