RTÉ News understands that there have been a number of ‘technical’ discussions on a ‘what if’ basis concerning Ireland's sovereign debt crisis and the EU bailout fund.

The Minister of Finance, the Taoiseach and the European Commission have all insisted that Ireland has not made any formal request for support from the €750bn European Financial Stability Fund.

Irish officials have also denied that any discussions or talks have taken place on an application.

However, RTÉ News understands that some discussions have taken place in the past week in a number of European capitals.

These discussions have revolved around the technical approach Ireland might take, should it need help.

An EU source told RTÉ that the hope firmly remained that Ireland will not need help, and that its budgetary plans will be sufficient to restore confidence in the financial markets that Ireland can recover from its problems.

However, there have been discussions at official level on the best political and legal option, should Ireland seek help.

These discussions have focussed on the breakdown of the €750bn fund.

When it was agreed last May in the wake of the Greek debt crisis the fund broke down as follows: €60bn from EU funds; €440bn from a new special purpose vehicle, based in Luxembourg, which would allow the vehicle to borrow money on the international markets based on guarantees provided by EU member states; and finally, up to €250bn from the International Monetary Fund.

In particular, RTÉ News understands, the technical discussions have looked at the possibility of Ireland - should it need help - accessing funds only from the first component; the €60bn from EU funds.

Under Community Law the European Commission could borrow up to €60bn on the international market using its AAA rating.

It is understood that using this option might alleviate certain political and legal uncertainties which could arise if Ireland tapped the €440bn special purpose vehicle.

That part of the overall €750bn was the most legally delicate aspect when the fund was negotiated by EU finance ministers in May.

It was created on a Dutch initiative to overcome the legal prohibition of a ‘bailout’ as enshrined in Article 125 of the Lisbon Treaty.

Because the €440bn would be dispensed through inter-governmental guarantees - thus avoiding an ‘EU’ element - it would not therefore breach the 'no bailout' rule.

But judges at Germany's Constitutional Court in Karlsruhe have yet to pass judgement on the overall EFSF and there are still some fears that they may be unhappy with it.

RTÉ News understands that some member states, including Germany, have been interested in the idea of Ireland only tapping the €60bn European Commission component as a way of avoiding any legal or political problems as far as Germany was concerned.

One analyst, quoted by Reuters, suggested the most Ireland might need would be €48bn.

EU officials insist, however, that these technical discussions have only been on a ‘what if’ basis, and that the hope and expectation remains that Ireland will not need help.

Meanwhile, Taoiseach Brian Cowen has denied claims that talks are already taking place with the European Union about an application for emergency funding.

He was responding to reports in the Reuters news agency earlier today that talks on the issue were already under way.

Mr Cowen said: ‘Ireland has made no application whatever for funding. We have funding up to mid-year because of the pre-funding arrangements of NAMA.’

‘We don't have to borrow any money in respect of the sovereign issue that affects the running of the country.’

Lenihan welcomes EU move to calm markets

Earier, Minister for Finance Brian Lenihan welcomed the solidarity and clarity shown by Britain, France and Germany after they issued a joint statement seeking to calm bond markets.

The EU leaders said that a plan proposed for 2013 to force bond holders to share losses during times of economic crisis would not apply to debt currently outstanding.

Minister Lenihan will unveil a four-year programme of austerity measures later this month.

The programme will involve a €15bn correction to rein in the public deficit, ahead of the Budget in December.

Mr Lenihan said the statement makes it clear that any potential private sector involvement in that mechanism does not apply to any outstanding debt and 'any programme under current instruments'.

The Minister said: 'Any new mechanism would only come into effect after mid-2013. So this would have no impact whatsoever on the current arrangements.

'Our EU partners have confirmed their full confidence in the budgetary strategy being pursued by the Government.'

Speaking on RTÉ's News at One, Mr Lenihan said it was imperative that next month's Budget be passed in the Dáil.

He said if the Budget did not pass this year it would be a major failure in the credibility of the political system.

Minister Lenihan said the markets were looking for more black holes in the Irish banking system, but both the Governor of the Central Bank and the Financial Regulator said there are none.

He said Ireland is following the correct course of action with its budgetary plan and international organisations are supportive of the €6bn adjustment in Budget 2011.

Cost of borrowing decreases

Pressure on Irish bond prices eased this morning after the leaders' statement.

Yields on Irish ten-year bonds were at 8.47% this evening, compared to a peak of 9.25% yesterday.

The Irish sovereign debt crisis was the subject of discussions earlier today at the G20 summit in South Korea.

German Chancellor Angela Merkel said the EU is ready to deal with all scenarios regarding Ireland's debt.

Ms Merkel told a news conference that financial market investors had failed to understand the EU's support mechanism to deal with crises in the eurozone.

British Prime Minister David Cameron said: 'I would applaud what the Irish government is trying to do to sort out their very difficult position with regard to their public finances.'

Ms Merkel said yesterday that European taxpayers should not pay the whole price of rescuing debt-laden countries.

She said: 'Let me put it simply - there may be a contradiction between the interests of the financial world and those of the political world.

'We cannot explain to our voters and citizens why taxpayers must finance certain risks, and not those who made a great deal of money taking those risks.'

German Finance Minister Wolfgang Schaeuble said it was up to every EU country to apply for help 'if they need it'.

European Commission President José Manuel Barroso insisted yesterday that the EU was prepared to stand by Ireland.

'What is important to know is that we have all the necessary instruments in place now to support Ireland if necessary,' said Mr Barroso.