Low borrowing costs may be ‘reward’ for not burning bondholders – ESM chief
The head of the European Union’s bailout fund has said that Ireland’s currently low cost of borrowing may be a reward from the market for not imposing losses on senior bondholders of bank debt.
Klaus Regling, who heads the European Stability Mechanism, was speaking after a meeting with the Minster for Finance Michael Noonan.
He told reporters that the ESM has been authorised to set up a €60 billion instrument to recapitalise euro area banks, but this will only be available after the Single Supervisory Mechanism is established in November.
The question of using the ESM to retro-actively recapitalise banks in Ireland or anywhere else can only come into play next year, said Mr Noonan, who added that Ireland will continue to look for such a recapitalisation.
Mr Regling said that the responses to the crisis have evolved over time and that options that were not available to Ireland, Portugal or Greece have become available now, while new options may become available in the future.