LONG-TERM, low-cost financing for Irish Bank Resolution Corporation (IBRC) may now be on the cards following Thursday night’s European summit, Central Bank governor Patrick Honohan said yesterday. This in turn might facilitate a return to the markets for Ireland, he noted.

Speaking at a conference organised by the Institute for International and European Affairs in Dublin, Mr Honohan said the lack of any explicit commitment to long-term, low-cost financing of IBRC’s cash needs “has no doubt represented one of the obstacles to Ireland regaining market access on the necessary scale in the immediate future”.

However, following Thursday’s summit, at which it was stated that the commission would look to improve the sustainability of Ireland’s financial sector, Mr Honohan said that it might not now be “unrealistic” to expect that this “important loose end” can be tied up soon.

The Government has been trying to secure a restructuring of the repayment period and the interest rate burden on €31 billion in promissory notes, or IOUs, associated with the former Anglo Irish Bank.

In a wide-ranging speech, which traced the Government’s approach to recapitalisation of the banking sector since 2009, Mr Honohan said that official financing received from Europe has been a “lifeline”.

He also downplayed the possibility that yesterday’s Personal Insolvency Bill could cause further problems for the domestic banking sector.

“It should not be thought a paradox that a more engaged and holistic approach by banks and a less rigid and costly insolvency framework can help reduce loan losses over time,” he said.

With regard to the commission’s “clear push” towards integrated banking supervision, Mr Honohan said that when it came to financial integration, “there is very little by way of threat to Ireland in moving forward”.

Speaking on the broader economy, Mr Honohan said that while there had been “several setbacks in the euro area and some missed opportunities” he nonetheless asserted that step-by-step actions had been taken to build the conditions needed “to ensure a stronger recovery of the Irish economy”.

Looking ahead, however, he noted that a number of factors had to be satisfied before a sense of normality could return.

“If financial markets and growth conditions in Europe can indeed be stabilised, if financing conditions for Ireland can be improved, and if restraint remains the policy watchword at home, the corner can soon be turned,” he said.

Assessing what can be done about Ireland’s €64 billion bank debt, Karl Whelan, professor of economics at UCD, said that any “retrofitting” efforts would be complex.

He said this would also raise “different practical questions” than current discussions about EU-wide deposit insurance and bank resolution.

Also speaking at the event was Donal Donovan, adjunct professor at the University of Limerick and former deputy director of the International Monetary Fund.

Given the euphoric reaction to Thursday’s European summit, Mr Donovan made the point that “debt cannot be made to go away; someone has to pay”.

Mr Donovan also questioned the tendency by politicians to think of European issues, such as the financial services tax, solely in terms of immediate Irish interests.

“When last did one hear political leaders give their vision as to what makes sense for the euro area as a whole, and thus ultimately Ireland,” he asked.

John Bruton, chairman of IFSC Ireland and former Taoiseach, said no bank should be too big to fail and that banking should be like any other business.