The president of the European Central Bank Jean-Claude Trichet says he is confident that the Irish people can cope with this difficult period in its history.
He described the €85 billion rescue package agreed with the European Union and the International Monetary Fund as the best programme "to preserve the medium and long-term stability and prosperity of Ireland".
"These times are obviously very difficult. They're coming after times that were very, very good and affluent of course, and now adjustment has to operate," he told Irish reporters after the ECB left interest rates unchanged for the 19th consecutive month.
"I am confident that the Irish people who realise that it is extremely important to be for the long run competitive and to prove what they have always proved in the past – namely that they are able to cope with difficult periods."
Asked by The Irish Times whether the ECB forced Ireland into taking a bailout, Mr Trichet insisted that it was the Government's decision to request the aid package.
The Government had discussed the country's financial position with the international community and that all parties had concluded that it was "necessary to engage in this adjustment".
"The Government of Ireland in my opinion took the decision that was really necessary, absolutely necessary to redress the situation with the help of the international community and with the help of the Europeans," he said.
Mr Trichet didn't expect "abrupt changes" to ease pressure in the eurozone bond markets in reaction to the plan, he said, but that they would be "progressively convinced" by the Government's actions.
The success of the EU-IMF programme would depend on the Irish people and the Government continuing to show that they can implement the plan "in a good fashion".
"If credibility comes back, then everything will be very easy," he said.
Mr Trichet admitted there were problems "here and there" in the eurozone, including property-related issues, and said there was "hard work to be done". The plan for Ireland would benefit the euro area, he said.
"The euro as a currency is very credible and very stable. The financial stability of the euro area depends of course the appropriate decisions taken of each government," he said.
The ECB supported the banks in Ireland more so than in any other country, he said. Reassuring Irish depositors, he said that was a "serious" plan to solve the problems facing the Government which is "connected to the banks".
Asked if the ECB had stopped funding the banks in September and October, leading them to borrow from the Irish Central Bank, he said it provided financing to banks but that loans were also be provided by national central banks.
Yesterday, the ECB bought government bonds, including Irish debt of more than €100 million, in its biggest intervention since May to prop up the euro bond markets.
Mr Trichet said the ECB would continue buying government bonds to ease borrowing costs of member states and would postpone its exit from emergency liquidity measures to help ease the ongoing volatility in the bond markets.
The measures were "commensurate to the impairment of the markets", he said, and would continue to help restore the euro zone money markets to normality.
The ECB will keep offering unlimited loans to banks at cheap interest rates through the first quarter of next year as the debt crisis shows no signs of easing, the bank said.
The Irish banks would be restored to health when the EU-IMF programme regained the credibility of the markets, said Mr Trichet.
The ECB welcomed the Government's commitment to "take any further measures that may be appropriate" to achieve the objectives of the EU-IMF programme.
