The President of the European Central Bank has said he expects the Department of Finance to consult with the ECB over the possible release to the Oireachtas Banking Inquiry of a letter sent to Brian Lenihan in November 2010.

The letter, which details the ECB's objections to the Irish State imposing losses on bank bondholders, which the state had previously guaranteed has been a source of political controversy.

The ECB boss says the bank will not release the letter itself because it has ongoing concerns about financial stability risks in Ireland.

In March, the Sinn Féin MEP for Northern Ireland, Martina Anderson wrote to the ECB asking if any action would be taken against Ireland if the Lenihan letter was handed over to the Oireachtas Banking Inquiry. 

In a reply dated 6 April, Mario Draghi says that "provided the Irish Department of Finance considered this letter to be of relevance for this inquiry, it would be standard practice and in line with the principle of sincere co-operation among public institutions, for the Irish Department of Finance to consult the ECB on the potential release of the letter to the Oireachtas prior to making any decision."

He goes on to state that the ECB would respond to the Department of Finance "in the light of the prevailing circumstances and on the basis of an appropriate weighing of relevant European Union interests".

Mr Draghi says that in early march the ECB governing council considered the question of public disclosure of the letter (following a request to do so from the European Ombudsman).

He says the ECB decided not to release it for the time being as "the protection of the public interest as regards monetary policy in the European Union and financial stability in Ireland continued to justify the confidentiality of the letter".

Mr Draghi says that even though several years have passed, and the prospects for the Irish economy have improved considerably "risks, especially financial stability risks are still present."

He says "the situation continues to require close monitoring", and notes that Ireland is under twice yearly post-programme monitoring by the Troika.

He concludes the letter by saying that the governing council will re-evaluate disclosure of the letter "at a more advanced stage of the post programme surveillance".

A copy of Mr Draghi's letter to Martina Anderson can be viewed here.