Central Bank Governor Patrick Honohan has said "it was not surprising" talks on resolving Ireland's bank debt issue has suffered from "two steps forward and one step back."

He said it was a very complex situation where each player was "trying to redesign the system on the hoof."

Mr Honohan said "the process was continuing and we will see what happens."

He was speaking after Germany, the Netherlands and Finland made a statement widely seen as a set-back for the Government's bank debt negotiations.

Finance ministers from the three countries said that the European Stability Mechanism should only be able to aid in future bank crises and not those from the past.

Mr Honahan also said the decision by the Government to accept property loan losses before they were quantified was a "big mistake". He was discussing the establishment of NAMA.