The President of the European Central Bank, Mario Draghi, has defended the role of the ECB in the bailout programme in Ireland, telling MEPs not to "blame fire damage on the fire fighters".
Mr Draghi said the Irish banking crisis was entirely home made.
At the time there were no rules of procedure for bailing in creditors, nor were there institutions like the ESM and the single supervisor for dealing with bank collapses, he added.
He said it was not right to judge actions taken in 2010 by the standards of what is available now for dealing with banking crises.
The ECB chief also said that the amount of money that could have been bailed-in from unsecured creditors of Irish banks was very small compared to the losses that private investors had already suffered in the collapse of the Irish banks.
"Let's not forget the whole banking crisis was entirely home made. It was exacerbated by a series of decisions taken by the government of the time, and taken before the ECB got involved," Mr Draghi told the European Parliament today.
"The formal burning out of senior bond holders was not a decision taken by the ECB but taken by the Irish government. The ECB advised in that direction, but didn't have the authority or means to impose this decision," the ECB chief said.
He said it was "very difficult to judge actions taken at the time with the eyes of today".
"At that time there were no clear rules about bail-in, and there were no precedents, so there was no idea of what the order of precedence should be. This contributed to making financial markets more fragile. The ECB is in favour of burden sharing now, but the necessary precedents to facilitate a bail-in were missing [in 2010]," he stated.
Mr Draghi said a compelling argument against bailing in unsecured creditors of Irish banks in 2011 came with what he called the "good news" in the autumn of that year with the results of the PCAR test of banks capital adequacy.
"There was some concern the banks would need more capital, but the ECB assessment was that they would need less than expected. This led to a rise in confidence in the Irish banks and when this confidence was returning the ECB thought it would have been highly disruptive to bail in €4 billion when €43 billion was already lost," he stated.
"The bail in later foreseen was €2 billion because Irish authorities wanted to exempt two Irish banks, with a potential high cost in confidence in the Irish programme. The key issue was restoring market access - and thanks to the sacrifices of Irish people and the completion of the programme this was the beginning of a 100% success story which all the Irish people should be proud of."
He said the situation is now very different - Ireland has the fastest growing GDP in Europe while Irish per capita GDP is higher than Euro area average.
"Now we have a well defined set of rules, a single regulator, and have almost eliminated the ambiguity of who makes decisions," Mr Draghi said.
Draghi signals ready to act on extending money printing
The head of the European Central Bank also underlined the bank's readiness to extend money printing, warning that a key measure of economic health - price inflation - was flagging.
"Signs of a sustained turnaround in core inflation have somewhat weakened," Mario Draghi told the European Parliament's economics committee, addressing a barometer of economic health that could influence the ECB's massive money printing scheme.
His comments, pointing to the risks of a spillover to Europe from a slowdown in China or other emerging markets, amplify a chorus of similar warnings indicating further possible action as soon as December 3, when ECB policymakers next gather.
"We have always said that our purchases would run beyond end-September 2016 in case we do not see a sustained adjustment in the path of inflation," Draghi added, calling its quantitative easing scheme "powerful and flexible".
"Other instruments", he said, "could also be activated". People familiar with the matter said this week that the ECB is examining whether to buy municipal bonds of cities such as Paris or regions like Bavaria.
The bank launched the programme, under which it buys €60 billion a month of mostly government bonds, in March. By next September, when purchases are due to end, the ECB will have spent more than €1 trillion to lift inflation and growth.
The scheme also allows the bank to buy asset-backed securities and covered bonds, but those markets are relatively small.
Mr Draghi also indicated the ECB may change its involvement with the International Monetary Fund and European Commission that oversaw the bailout programmes of countries such as Greece or Ireland.
He also said the ECB would publish the diaries of members of the ECB's executive board, which forms the nucleus of policy, after a recent request for that information revealed hedge funds and banks had regular contact with policy setters.
"We have had and still have a clear rule - we do not discuss market-sensitive information in non-public meetings," he said.
"For our monetary policy to be effective, however, it is important to meet market participants and to also hear their views," he added.
The ECB's transparency has come under heightened scrutiny since Coeure told a closed-door meeting in May that the bank would front-load its asset purchases during the summer months. It has since revamped its transparency rules.
UK negotiations must preserve euro status -ECB's Draghi
European Central Bank President Mario Draghi said that negotiations with Britain on changes to its relationship with the European Union must preserve the "extraordinary achievements" of the euro and the EU's single market.
He was responding to questions by two senior European Parliament members who urged him to take a stance on efforts by British Prime Minister David Cameron to secure recognition that the EU is a union with more than one currency.
"The treaty is very clear on this. It says that the union's single currency is the euro," the ECB chief said, after saying he did not want to comment on a political question.
David Cameron is seeking a new deal for Britain before putting continued EU membership to a referendum before the end of 2017.
He sent a letter to European Council President Donald Tusk this week outlining his main demands, including guarantees that the euro zone would not discriminate against EU members that are not members of the single currency.
Britain and Denmark both have permanent opt-outs from joining the euro.
Other countries that have joined the EU since the currency was created are obliged by their accession treaties to adopt the euro once they meet the criteria, although some - such as Poland - are reluctant to do so.
