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Ireland defaults what happens The July guarantee

  • 10-04-2011 9:23am
    #1
    dario28
    Registered Users, Registered Users 2 Posts: 1,187 ✭✭✭


    If Ireland defaults what happens the guarantee that's due to expire in July ??


Comments

  • #2
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    A default of any kind towards its creditors does not inherently alter the Deposit Guarantee Scheme or the ELG Scheme (in other words, the Government Guarantee). Although it goes without saying that if the state defaulted on one party, it could essentially default on another, i.e. depositors.

    There is no indication that any default in on the horizon. The state is fully financed, albeit expensively financed.


  • #3
    Inverse to the power of one!
    Closed Accounts Posts: 296 ✭✭Inverse to the power of one!


    My understanding would be that most of the senior bonds have been paid off, were we to default after this point, further payments from the ECB/IMF would be ended and we would have to split from the Eurozone to establish our own currency to manage our sovereign debt going forward. From there we would be in Iceland/Argentine territory with a sovereign debt and currency crisis to be cleaned up.

    The interesting question from here would be how we would function with no credit available, the current deal means that defaulting would put the IMF in a place where they could not assist us due to being entwined with the current EU bailout.

    Others here are more knowledgeable, but that's the gist of it I think.


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