Ireland - 2006 Article IV Consultation - Staff Report; Staff Supplement; And Public Information Notice on the Executive Board Discussion (Electronic book text)

1. The economic and financial pressures facing Ireland are intense. At the heart of the problem is Ireland's banking sector, which is over-sized relative to the economy and holds sizeable vulnerable assets despite major support measures taken by the authorities. These deep-rooted structural problems have resulted in a marked erosion of confidence, leading to a loss of deposits and market funding, almost all of which in recent months has been replaced by ECB funding. These concerns have come to a head, as the banking sector's woes have eroded the sovereign's credibility at a gathering pace.