An executive board member of the European Central Bank has said that Ireland's state guarantee for banks complies with the EU's approach for dealing with market turmoil.
The comments follow remarks from French Prime Minister Nicholas Sarkozy who said the Irish guarantee created a spiral where money would have gone from country to country depending on who offered the best return.
In an interview with RTE News, Jose Manuel Gonzalez Paramo backed the Irish scheme. He also said he believed Irish authorities were monitoring whether banks in Ireland needed capital injections. He said where there should be funding authorities would provide it.
Mr Gonzalez Paramo said the current turmoil showed that banks also needed to diversify their sources of funding and not solely rely on the money markets for finance.
Meanwhile, the chief executive of the British Bankers Association has said that changes in the Irish Government's bank guarantee scheme, to include foreign owned banks operating here, gives better balance and removes their disadvantage.
Angela Knight welcomed the fact that having addressed Irish banks' problems that the government had then sorted out the 'rough edges' to the legislation.
Ms Knight said the industry now recognises that there needs to be regulatory change and that banks themselves have to have better risk controls, but she said that the sector must also be careful that it does not impact its own industry in such a way that makes it slower to recover from this crisis.
She said that the Far East is a vibrant place and that it will grow in importance as more money heads that way. She said that how the industry addresses the next year is critical.
'If we address it well we get the improvements, and we revitalise our centres and so our economies,' she said. 'But if there is now a rush to over-regulate on the back of banks who should not have been involved in all of this then we will cause a real long-term problem,' she warned.
Ms Knight is attending the Irish Banking Federation's annual conference today in Dublin.
Finance Minister Brian Lenihan has said that the Government would prefer private investment in banks but state participation is possible and is kept under review while banks' capital requirements are being assessed.
Speaking ahead of the IBF's conference, the Minister said that the bank's capital requirements are constantly under review.
