The ECB is a Franco-German institution: describing it a "European" despite the fact it now has a token Italian , albeit a fairly brilliant token Italian, as its head, is a lie. Draghi was appointed because the Germans had lost their candidate & the French just had their turn, in the person of the startlingly incompetent Trichet. The French, in the kind of corrupt back-room deal in which they specialise, still got one up by having the Italian on the six person board to resign to make way for a French candidate: it is hardly likely he brings as little to the party as Trichet but one is not sanguine.
The ECB has used our Kermit The Frog position stifle any official criticism of it's own role in the disaster & to ensure our government does not break ranks on debt payback, both to bondholders & to the moneypit that is the ELA. This is blackmail.
Under the Maastricht treaty the ECB has a duty of to ensure the stability of banks in the Eurozone. Trichet ignored this to the point of deliberate negligence.
Short-term paper (bonds) are heroin to banks, providing funds that need to be repaid in relatively short order. Commit to much of those funds to loans & a bank is dependent on rolling the bonds over rather than repaying them. That is financial addiction: cold turkey of a bond market withdrawal leads to disastrous results.
Irish banks were allowed create just such an addiction trap between 1999 & 2007: the first 8 years of the Euro. As low interest rates encouraged more borrowers & property asset prices increased, the amount of collateral and loans increased, the vicious circle meant that deposits could not fund loans. (Some of those deposits were themselves the direct result of loans: fractional reserve banking is magic)
This growth in lending out paced the ability of deposits to fund it so the banks were relying more & more on short term Eurobonds. The Euro had gotten the banks over the exchange rate issues of borrowing abroad.
Lending grew from €120b in 2000 to €400b in 2006 and by 2006 Eurobonds accounted for €129b of the funding for that credit. Why was the ECB NOT warning the Irish Government about this massive inflow of credit? Why were no steps taken to to regulate this Amazon of euro's flowing into Irish banks. Did a compound annual growth of over 28% in lending in the final 3 years of the boom not ring alarm bells in Frankfurt?
If the answer is No, then Trichet was a fool, if yes, a knave. Either way the collapse of the Irish banks happened due to ECB negligence and we need to make this very clear to Europe. Then we need to stop paying the ELA debt to our own Central Bank.
We can compromise on that, we are a reasonable people. We will pay the money in, but instead of electronically burning it, the Central Bank will credit the government with the funds. We still pay our debt, but costlessly to ourselves, not to as a holocaust to the German Gods of Moral Hazard & Hard Money.
Perhaps it is time to consider what charges might be brought against Mr Trichet for his dereliction of duty. An arrest warrant might concentrate minds.