Introduction
Below are broad options set out for Ireland's economic situation.
Stick to the Plan
Positives
Negatives
Default
The points below are based on Wolfgang Munchau's article in the Irish Times of 2 December 2010 which can be found here.
How could this be done
- Revoke guarantee of banking system
- Convert subordinated and senior bondholders into equity holders
- Assume a growth rate of 1% and if Ireland is found to be unable to pay its debts then restructure Irish sovereign debt
Positives
- Ireland's debt burden would be reduced and its taxes could be spent on the needs of its citizens
- European banks would be forced to write down losses on loans to Irish banks
Negatives
- Irish banks would have no funding to provide money for an undetermined period of time
- Ireland would be cut out of capital markets for an undetermined period of time
- European bond yields would rise
- Relations would European partners would be severely damaged
- Ireland would become less attractive for foreign direct investment due to instability.
Leave the Euro
How could this be done
Positives
Negatives
Other
How could this be done
Positives
Negatives
What the EU should do
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