A former ECB director has said that a deal to alleviate the burden of servicing the Anglo Irish Bank promissory notes needs to be found, but one that does not scare the markets.
Lorenzo Bini Smaghi was speaking on RTÉ's This Week.
He said that European authorities should work to find an agreement on the promissory notes to alleviate the burden in a way that is consistent with the overall scheme.
Mr Bini Smaghi said it would be "silly to blow everything up" when Ireland is "so close" to returning to the markets.
He said Ireland's bailout programme is beginning to work, but attempting to alter the terms now could be damaging.
Mr Bini Smaghi said using the referendum on the fiscal treaty as a weapon in Europe would isolate Ireland in the future.
The Italian also described Central Bank Governor Patrick Honohan as active and influential at the European Central Bank.
Mr Smaghi said Ireland could not sign an agreement at European level and then turn out a negative result at home.
He said if that was the outcome then Ireland would "not count very much" at European Union level and risked being marginalised.
