ECB’s Constancio: No link between Ireland, Portugal aid

By Marc Jones and Paul Carrel

FRANKFURT (BestGrowthStock) – Ireland has not yet asked for financial aid and if it did so the move would not necessarily force other countries such as Portugal to follow suit, European Central Bank Vice President Vitor Constancio said on Tuesday.

Constancio said that it was up to Ireland to ask for aid if it believed it would help stabilize financial markets. Dublin could start by tapping the 60 billion euros available under the European Financial Stability Mechanism (EFSM).

A European Union/International Monetary Fund package would offer more aid.

“If they (Ireland) ask for the EU/IMF stabilization facility, it is because they conclude it will stabilize the situation. But it is up to them,” Constancio told reporters on the sidelines of the Euro Finance Week banking conference.

Asked whether Ireland could simply use the EU’s 60 billion EFSM fund rather than the 440 billion euro EFSF, he said: “It could be used as a starting point… but the way it is seen is that it is part of a package.”

Constancio said it was not inevitable that Portugal or even Spain would have to tap to European aid if Ireland did, although it could not be predicted whether markets pressure would turn on them.

“There is no necessary link in this respect. All situations are different from each other…it depends of course on market developments, which cannot be predicted,” he said.

“Several countries have been under some pressure from the markets, that is well known. But as you have seen, there are differences. The market really discriminates (between) the different situations that exist,” he added.

Constancio made the comments before leaving for a meeting of the Eurogroup of finance ministers where the recent escalation of euro zone debt market tensions will be top of the agenda.

Asked if he expected any decisions on Ireland at the Eurogroup meeting, Constancio said: “I really don’t know. As you know, it’s up to the authorities of each country to decide on their own what they want to do.”

Luxembourg Prime Minister Jean Claude-Juncker, who chairs Tuesday’s talks in Brussels, said on Monday Ireland was not even close to asking for a bailout but the Irish opposition said it believed such moves were already under way.

Constancio also played down suggestions that the fact the ECB’s purchases of government bonds remain limited, showed it had lost faith in the controversial buy-back program. He said there was no clear explanation of why it had not ramped-up its purchases in the wake of the escalation of debt market tensions.

(Reporting by Marc Jones; Editing by Ron Askew)

ECB’s Constancio: No link between Ireland, Portugal aid