Mr. David McWilliams:

The most important thing for me in the Irish banking system was that we were running liability and asset risk, which is a terrible cocktail. The liability risk was the hot money coming in seeking a higher yield and financing commercial property. One stops commercial property prices rising by managing liability risk, that is, both sides of the balance sheet. If, for example, the regulator saw that a bank had just issued a short-term liquidity instrument of €500 million, which was happening all the time, it could have said, "Hold on a second, you cannot do that." The regulator would manage the bank's liabilities, which are the source of its delinquency, and as a consequence the bank would not be able to lend for commercial property. That is what we have to do in an open economy. Instead, however, we were looking at the asset side of the balance sheet and praying it would be okay but then panicking.