The Governer of the Central Bank says it is ‘not surprising’ that negotiations on a deal on the Irish banking debt have taken ‘two steps forward and one step back’.

It comes after the German, Dutch and Finnish Finance Ministers issued a statement earlier this week saying that the European Stability Mechanism (ESM) should not apply to ‘legacy debt’.

After meeting in Helsinki on Tuesday the trio issued the joint statement.

In it they said that the European bailout fund should only be used to deal with current difficulties and would not apply to legacy assets.

Meanwhile the Finish Prime Minister has also said that Eurozone policymakers should discuss introducing International Monetary Fund (IMF)-style precautionary credits to help troubled states retain access to bond markets.

“It would mean a small, conditional loan to a country that wouldn’t take it but could use it when raising credit itself from the market” Jyrki Katainen told reporters Tuesday.

The precautionary – or flexible – credit would underwrite the debt auction of the country.

He reiterated that Finland opposes increasing the size of the permanent bailout fund the ESM.

Speaking at a Corporate Restructuring Conference in Dublin today Patrick Honohan said the development is unsurprising but that talks on the matter will continue.

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