Ireland Property

Should Ireland Have Guaranteed Savings?

I wonder why the Irish government felt the need to step out of line of other European banks in guaranteeing all savings held in its banks. The move now appears to have caused a drain on investor funds heading particularly from the UK to Ireland. Finance Minister Brian Lenihan indicated that all savings at Ireland’s six banks would be protected until September, 2010. Additionally, the government will underwrite the banks’ debts and loans in return for a fee. This announcement follows a 26 percent fall in Irish bank shares on Monday, September 29.

The banks covered are Allied Irish, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society. The guarantee by the government means that the Irish people will provide backing for as much as €400-500 billion of liabilities.

Mr. Lenihan said: “If funds are not secured by the Irish banks, it will be a very, very serious matter for the economic life of this community.”

“Every bank, every worker, everyone knows how short those funds have been in the last year. If they dry up entirely, then that is very serious for Ireland. We must take action to secure the stability of our banking system and that is what the government decided to do.”

Is this a move out of desperation did the Irish government know something that we don’t to cause such a drastic move. One thing is for sure is has put immense pressure on Gordon Brown to match the Irish commitment to their savers

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