Irish finance ministry officials worked on contingency plans for a possible euro-area exit during the nation’s financial crisis, according to a former ministry head.
“There was certainly work done on what would happen if we found ourselves unceremoniously shown the door or if that was the only option,” Kevin Cardiff, the finance ministry’s head official between 2010 and 2012, told a parliamentary inquiry into the nation’s banking crisis in Dublin on Wednesday. “This was dynamite stuff.”
The yield on Ireland’s benchmark 10-year bonds peaked at 14.2 percent at the height of its crisis in 2011. Ireland entered an international bailout program in 2010, exiting in December 2013. The yield on its 10-year government debt has since fallen to 1.6 percent.
Cardiff said Irish officials weren’t alone in weighing contingency plans at the time.
“A colleague from another jurisdiction said, ‘Kevin, are you working on such and such?’’ I said, ‘No, of course not,’” he told lawmakers. “He said, ‘Well, could you have whoever’s not working on it telephone the person who’s not working on it in my office.’”
Cardiff said he first asked a ministry official in September 2008 to look into how the nation might go about seeking a bailout from the International Monetary Fund, if necessary. This was just before Ireland guaranteed its banks and more than two years before the nation applied for an international rescue.
Cardiff said that work was part of planning for various scenarios, and did not stem from any political direction.