Professor Patrick Honohan:

I think that is right. We were in suspended animation for two years. One of the things the guarantee did, and we were talking about the subordinated debt, but guaranteeing the senior debt had a double effect. It is not just a question of not paying those guys, but any restructuring of the banking system, like liquidating or closing, would have triggered immediate payment under the guarantee from the Government. That meant that doing something with Anglo Irish Bank or with INBS, all these things, could be considered at leisure, because there was nothing one could viably do until the end of September 2010 and by that stage the damage was done.

Deputy O'Donnell asked whether there should have been emergency liquidity. That would have been a good tool to use at that moment. It was being used elsewhere in Europe. It would have given a number of days to take a breath and deepen the analysis of just how bad the situation was.