Transcripts reveal US concerns about the Irish economy in early 2010
Central bankers in the US were warned that there was a possibility that Ireland would need a financial bailout six months before the country accepted a bailout package.
Transcripts from 2010 show that the Federal Reserve's open market committee has briefed on Ireland's financial problems during a wider survey of economic instability across the euro zone.
The newly published records show that it was believed that €67.5bn would be needed to bailout Ireland - while concerns were raised over the sustainability of the country's debts.
“Debt dynamics calculations for Ireland and Portugal suggest that the fiscal responses required for these countries to avoid restructuring are, frankly, draconian,” said current Fed chair Janet Yellen, who was then the chief of the San Francisco Fed.
This discussion took place as Greece fell into financial turmoil which resulted in it taking €45bn in financial aid.
“The good news is that they [Portugal, Spain, Ireland] are at better starting points than Greece in terms of their debt-to-GDP ratios and in terms of their current account positions. Some countries, like Ireland, have already demonstrated quite a bit of social cohesion and are already adopting pretty significant fiscal consolidation,” the then Fed deputy chairman William Dudley said.
He continued: "The bad news is that there’s nothing beyond what these countries can do for themselves. There’s no discussion, at this point at least, of packages being cobbled together by Europe to provide aid to these other entities," - adding that the IMF may become involved if Europe's problems intensified.