Irish Transport Minister Leo Varadkar said using the European Stability Mechanism to recapitalize troubled banks may not be the best way to contain the euro-area debt crisis.
“The ESM is a little like the IMF: it has to be paid back,” said Varadkar in an interview with Dublin-based RTE Radio today. “So, if the ESM did directly recapitalize the Spanish banks, would the Spanish banks really ever be able to pay the ESM back?”
Similarly, Varadkar said if the ESM was used “retrospectively” to cover Ireland’s bailout of Allied Irish Banks Plc (ALBK) “is AIB really going to pay the ESM back?”
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