The Government has not discussed a rescue package for euro-area countries with other eurozone members, Minister for Foreign Affairs Micheál Martin said this morning.
"Finance ministers didn't discuss anything to do with a rescue package for members of the euro zone," Mr Martin said on RTE's Morning Irelandtoday, when asked about a Reuters report that such a package had been agreed.
"We have to be careful about rumours doing the rounds," Martin added.
A spokesman for the Department of Finance reiterated that finance ministers had not discussed a euro zone rescue plan.
Senior German politician Otto Bernhardt was reported this morning as saying euro zone countries have agreed a rescue plan to prevent members of the currency bloc going bankrupt, with Ireland and Greece the most likely candidates for aid.
Bernhardt is a member of Chancellor Angela Merkel's Christian Democrats (CDU) and chairs the party's financial policy group in parliament.
"There is a plan. The finance ministers have agreed the procedures. The core point is: 'We won't let anyone go bust,'" he told Reuters.
Of all the euro zone states, Mr Bernhardt said Ireland was the in the "worst situation of all", followed by Greece. He made clear that any aid would come at a price.
"We would look very closely at past sins," Mr Bernhardt said. "We will not tolerate there being low-tax countries like Ireland for example. We will insist on a minimum corporate taxation rate."
Ireland is struggling in the economic downturn as the collapse of the property boom has sharply curtailed Government revenues while unemployment is rising a record pace.
Ireland and Greece are now paying hefty premiums compared to other eurozone members to finance their debt.
Mr Martin said the government is “focused” on its supplementary budget next month, when it will announce measures to deal with the Exchequer deficit.
Credit-default swaps on Government debt fell to 262 basis points today from 264 points yesterday, according to prices from CMA Datavision. They reached a record 396 basis points on February 17th.
Speculation has grown in recent weeks that stronger members of the 16-nation euro zone, such as Germany, could step in to help ailing partners.
On March 3rd European Monetary Affairs commissioner Joaquin Almunia said the euro zone had a way of bailing out its members, if they faced a crisis, before they had to seek help from the International Monetary Fund (IMF). However, he refused to give details, saying "it is not clever to talk in public about this solution".
European Union leaders met in Brussels last Friday to agree their stance for a Group of 20 summit on the global financial crisis in London on April 2nd.
Asked what the likelihood was that the plan would be used to rescue a fellow member of the currency area, Mr Bernhardt said: "It depends on how the international crisis develops. It could be that they (Ireland) can manage without getting credit."
"But the chances we will need to help are greater than the chances that we will not need to help," he added.
A reserve fund is on standby at the European Central Bank, ready to be tapped at a moment's notice should it be needed, he said. "We have already built up a fund at the ECB," Mr Bernhardt added, saying of any state that needed help: "They would receive loans."
"We are in a position to act within 24 hours. The ECB would take immediate action," he said. "The ECB can make an unlimited amount of money available."
The ECB said it had no comment on Mr Bernhardt's remarks.
Mr Bernhardt said the danger for Germany of not helping would outweigh the cost of helping: "What is the alternative? We would otherwise lose our currency."
Agencies