In one of his last official statements before retiring as Governor of the Central Bank, Patrick Honohan reflected last night that Ireland could have received more support at the depths of its banking crisis from its Eurozone partners.

Speaking at the London School of Economics last night he said the European Stability Mechanism (ESM), the emergency crisis mechanism and fund, established by governments of the eurozone, could have shouldered some of the burden of the recapitalising the banks here.

"Had the ECB convinced the market that the Irish banks would be provided with sufficient liquidity for as long as needed, the Government might perhaps have been able to formulate and implement a renewed and deepened budgetary adjustment without the need for recourse to official financing

"Absent such statements of support, it was clear that an IMF programme could not be avoided and this was negotiated in November 2010," the outgoing Governor told the audience.

This could have come about through the ESM’s taking an equity stake in some of the banks or offering some form of insurance over their assets.

He confirmed the government here had argued in favour of such an approach on the basis that a smaller sovereign debt would have hastened market confidence in Ireland, but these calls were rejected.

Mr Honohan said he believed the European institutions subsequently regretted not allowing the government here to impose a haircut on senior bond holders of Anglo Irish Bank and that this influenced subsequent legislation to protect sovereign governments from the impact of significant bank debts.

The Governor also said that the mortgage lending constraints introduced by the Central Bank earlier this year, have made another housing bubble “impossible” here.

I don’t know where Dublin house prices will be in five years but I know there won’t be another bubble because we have the tools to prevent it,” he claimed.