Ireland said it was discussing stabilization measures with its European partners yesterday and ways to cut its heavily indebted banks’ funding costs in what a top EU official called a “survival crisis” for the euro zone.
A euro zone source said finance ministers of the 16-nation currency area meeting in Brussels would declare support for Dublin’s austerity measures and express readiness to help financially, if it asks for aid, but would not announce any practical measures.
In Dublin, Prime Minister Brian Cowen rebuffed calls to request a bailout, saying the government was fully funded until mid-2011, and insisted that only the banks may need help.
“The cost of money is simply too high,” Cowen said in parliament. “What we are doing is discussing with our European partners as to what stabilization (measures are) ... necessary.”
Irish banks have grown increasingly reliant on funding from the European Central Bank, as other commercial banks have been reluctant to lend to them following the financial crisis in fellow euro zone member Greece.