ECB’s Trichet: Ireland must stick to bailout plan

PARIS (BestGrowthStock) – European Central Bank head Jean-Claude Trichet said on Monday euro zone countries must do more individually and collectively to combat the bloc’s debt crisis, and Ireland must stick “rigorously” to its bailout plan.

In a position paper published on its website, the ECB earlier expressed “serious concerns” that Ireland’s rescue package could affect the institution’s liquidity operations in the euro zone.

Asked if he was concerned about the health of Irish banks, Trichet said: “The Irish (bailout) plan is designed for Ireland to face up its own particular problems, which have mostly to do with its banking system.”

“We consider it necessary (for Ireland) to complete this plan rigorously,” he told France’s Europe 1 radio without commenting on the ECB paper, which was dated December 17.

Irish sovereign debt was downgraded by five notches by Moody’s on Friday in a move likely to put extra pressure on the country’s banks.

European nations agreed last week to set up a permanent financial safety net from 2013 and the European central bank moved to increase its firepower to fight the debt crisis in the single currency area.

But the mechanism will only be used as a last resort to save the euro, and European countries did not discuss increasing the temporary rescue fund currently in place, which some analysts say would not be able to cope if Spain and Portugal both needed bailouts.

A more coordinated approach to fighting the euro zone debt crisis was needed, Trichet said.

“I ask everyone to take their responsibilities and that means, concretely, to do more individually and collectively in the current crisis.”

He dismissed a breakup of the euro zone as an “absurd hypothesis” and said the source of problems in the 16-member bloc was financial stability, not the euro currency.

(Reporting by Nick Vinocur; Editing by John Stonestreet)

ECB’s Trichet: Ireland must stick to bailout plan