Can you spare a cent?

19 November 2010 By Neil Unmack Follow @unmack1

The Irish central bank has increased emergency funding to the nation’s struggling banks. It has lent them up to 35 billion euros. This is risky given that the central bank has only 1.5 billion euros of reserves. No wonder the governor seems keen on an EU/IMF bailout.

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Ireland's central bank governor Patrick Honohan said in a radio interview Nov. 18 that the country's banks had needed emergency funding to cope with deposit outflows. Honohan also confirmed that he expected Ireland would receive a loan worth tens of billions of euros from the European Union and the International Monetary Fund.

Ireland's banks have borrowed significantly from the European Central Bank. They have also borrowed from the central bank under emergency liquidity facilities.

At the end of 2009, 11.5 billion euros of "other assets" were recorded on the central bank's balance sheet, the majority of which were emergency facilities. These "other assets" rose to 34.6 billion euros in October from 14.3 billion euros at the end of August, according to data published by the central bank. Irish banks' ECB borrowings rose by 35 billion euros during the same period.

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