Professor Alan Ahearne:

I would have heard about it the next day. I was a little surprised at how broad it was. I had thought the Government would eventually do something to safeguard deposits. In early September a deposit of €20,000 was guaranteed but one could lose 10% of it, which I wrote at the time invited a run. That was increased to €100,000, but I was pretty sure that if push came to shove the Government would increase it again, as many countries had done, and make it unlimited to secure deposits.

As I wrote, the wholesale funding was a little more puzzling, particularly the subordinated debt part of it. I had not appreciated how intense the funding pressure was. When I wrote that article I was writing about money flowing out of some of the banks and into AIB and Bank of Ireland. It turned out that those banks were under pressure as well but not quite as much pressure. I had not appreciated that this was not just a couple of banks but a system problem.

Referring to the earlier discussion about dominos, this guarantee included all the institutions, so there were no two dominos separated from the other four, and I concluded that the Government had decided it was not possible to knock down two dominos without knocking the other four. I assumed it had considered it carefully and determined that that was the outcome.