Liquidity Risk

The Central Bank released a discussion paper this week on the management of liquidity risk  – it is available here.  Comments are invited until December 31st to liquiditydp at

9 replies on “Liquidity Risk”

The call for debt write down is coming from mount merrion not from Franfurt. I speculate that as a result of the patient diplomacy of the great helmsman from Islandeady we will get a restructuring of the Anglo pro notes.


Maybe, but it appears that if Anglo had been called “Franco” there might have been more ambitious plans.

Mickey Hickey

thanks for the link.
See the comments, Nos 1 and 2. I had to reply to them (after going to the trouble of registering).

1. Peter NY
‘ “Get the losses financed by countries that can afford them, like Germany”???
Mr Mathews, maybe you should take off your shoe like Krushchev did, and bang it against your head. If your statements are indicative of the Irish sentiment, it is time the EU is kicking out parasites like you, and the UK and Greece right with you! ‘

2. Outraged Oakland
“I am so glad we let Lehman Brothers fail. I hated, hated TARP, but we needed to show Wall Street that we would let them fail. Unfortunately, that message is being lost all over the world, especially Greece. Now Ireland wants to be bailed out by an entirely different country.

I understand if Germans revolt and start taking pitchforks after Merkel. After all, we are really talking about the income of all Germans. German money should belong to Germans.”

and then my reply…

“Outraged Oakland,

Re:’Now Ireland wants to be bailed out by an entirely different country’

You should understand that Ireland (the government & the people) DID NOT receive this money. This is unlike the situation in Greece where the sovereign did actually get the money.

In the discussion about money owed to bond-holders people use the phrase \”if Ireland can’t or won’t pay it back\”.

It is incorrect to use the word ‘back’.

What is being considered is whether to ‘pay it’, or not, but as we, the Irish citizens, never received this money in the first place it is wrong to talk about paying it ‘back’.

In fact not only did Irish taxpayers not receive the money, the fact that foreign banks lent the money irresponsibly meant that the vast majority of Irish people were disadvantaged by massively inflated house prices. Sensible people never wanted this money to flood into Ireland in this way in the first place.

Can you please draw attention to the distinction between ‘pay it’ and ‘pay it back’ in your discussions, as more and more people are being mis-led (also unintentionally) and perhaps in an unconscious way even the Irish people are having the way they think about this manipulated – the Irish public themselves sometimes now also use the word ‘back’ inappropriately.

Foreign PRIVATE risk-taking banks lent money to PRIVATE banks in Ireland, which later when going bust, in an attempt to stop a contagious disaster throughout Ireland and Europe, the Irish government said they’d try to guarantee this private debt (but the Irish citizens weren’t asked and certainly did not agree to it).

Professor Honohan and others said that Ireland prevented an event worse than the Lehman’s collapse in Europe. When it was obvious that the little Irish citizen couldn’t possibly pay this huge debt belonging to private risk-takers, Europe stepped in and insisted that there should be no ‘frightening the horses’, & haven’t yet let the debt be given back to those who it belongs to. Thank you. “

Liquidity risk is when you owe the ECB 153 thousand million and you don’t have a bulls notion where you are going to get some dosh to pay it back. And to compound the felony you embark on a policy of paying all bondholders of the banks and the sovereign in full.

They need to put more Euros in to get more Euros out – their eagerness to get the stuff out is perhaps a sign of weakness.
If we had officials who really cared about this place they would ditch their cosy network and tell them to go f……………….

Maybe a little off topic:
I’m alarmed at the 9% haircut on the €5bn portfolio of non Irish loans that BOI are selling:

Yes we knew Irish loand were awful…but foreign too ? 9% is serious considering that capital adequacy ratios would usually have 8% set aside. This suggests a total failure of the system of capital adequacy ratios

As such allowing for funding arbitrage, the loans should have sold for above face value.

The whole concept of liquidty vs capital is called into question by these type of deals.


Why not simply tear them up? €47 billion in dead dosh for a dead bank to be paid for by half dead serfs ….

‘… the great helmsman from Islandeady’. Tom Crean is dead – go see the play …

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