Prime Minister Enda Kenny had staked his government's reputation on cutting the €28 billion cost of bailing out Anglo Irish, now known as Irish Bank Resolution Corp (IBRC), and the ECB's governing council was considering the new plan after a previous proposal was rejected last month. The government sees the rescheduling of so-called promissory notes or IOUs given to IBRC as crucial to enabling the country to end its EU/IMF bailout on schedule this year.
Anglo Irish and its casino-style lending were at the heart of Ireland's financial crisis. The bank's near collapse in 2008 pressured the government in to guaranteeing the entire financial sector sucking it into a downward spiral and a €67.5 billion EU-IMF bailout. Under the new plan, the €28 billion in promissory notes will be replaced with long-term government bonds, meaning that Ireland can make more gradual repayments.
The ECB rejected Dublin's preferred solution of rescheduling part of its bank bailout bill when its board discussed the plan for the first time last month. Under its original plan, Ireland wanted the Irish central bank to hold a long-term bond for a minimum of 15 years. The ECB's Governing Council warned that such a long holding period would effectively be "monetary financing", which is prohibited by EU treaty.
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