21 Dec 2010

Europe's central bank worried about Irish bailout

3:46 pm on 21 December 2010

The European Central Bank has expressed concerns that the 85-billion-euro bailout of the Irish Republic could affect its ability to provide further support to eurozone members.

The bank says possible flaws in the bailout legislation could compromise its ability to provide collateral for future funding.

The BBC reports the ECB is concerned about the quality of the collateral it holds in case any loans made to Ireland are not paid back.

It also says the powers granted to Irish Finance Minister Brian Lenihan by a draft law "interfere significantly" with the rights of shareholders and creditors of financial institutions.

On Friday, credit rating agency Moody's cut Ireland's debt rating sharply.

The Irish government has introduced a series of spending cuts and tax rises totalling 15 billon euros as a condition of the bailout.

Last week, the International Monetary Fund approved a three-year loan of 22.5 billion euros for the republic - the first part of its contribution to the EU and IMF rescue package.