The Governor of the Central Bank has said that the summit decision pushes forward the process of breaking the vicious cycle of high interest rates on Government bonds.

Patrick Honohan said that market conditions will continue to appear fragile until that circle is broken and a more sustainable configuration of bond yields is restored.

He was speaking at the Institute for International and European Affairs in Dublin.

The Governor said that getting debt ratios back to moderate levels is the medium-term solution but that takes time.

He said that it remains to be seen whether action taken by European leaders to address the region's debt crisis will be enough to reassure markets, saying it would take time for bond yields to fall.

"It remains to be seen whether the initiatives in this direction (banking supervision, deposit insurance and resolution) will be enough in themselves to reassure markets," Patrick Honohan, also a board member at the ECB, said in the prepared text of his speech.

He said it may now "not be unrealistic" to hope issues relating to a refinancing of high-interest IOUs used to recapitalise Ireland's worst banks can be tied up relatively soon.

"If financial markets and growth conditions in Europe can indeed be stabilised, if financing conditions for Ireland can be improved, and if restraint remains the policy watchword at home, the corner can soon be turned," he added.