Was the financial catastrophe that hit Ireland from 2008 due to an accident or to wrong policies? It is natural As economies experience ups and downs at different periods, often being subject to a boom-bust cycle. The financial disaster that hit Ireland from 2008 onwards was certainly no accident, however. A global financial crisis followed in the same year, which would obviously have a negative impact on Ireland: it “contributed very significantly to the current woes of the [Irish] economy” (Fitzgerald, 2011). However, policies undertaken by the Irish Government, the Central Bank and the ECB are the main cause of the length and depth of the Irish recession. The origin of the Irish recession stems from the monetary policy implemented by the Central Bank and the ECB, and since the introduction of the euro in 1999. The integration of EU financial markets has enabled Irish banks to access funding from the international (wholesale) market, allowing Ireland to borrow abroad without the foreign exchange risks; As a result, banks were able to significantly expand their loan portfolios. This new source of funding allowed Irish banks to lend well beyond their domestic deposit and equity capacity. There was also the potential for large profits, as Irish banks could borrow short term at a cheap interest rate and lend long term at a higher rate. The interest rate given to customers was still relatively very cheap, and at a time when the economy was growing rapidly and incomes were increasing, people took advantage of cheap credit and borrowed excessively. The average household has taken out both small loans and large mortgages; small and medium-sized businesses borrowed more for expansion and business purposes, and real estate developers took on...... middle of paper ...... Social Stability Policy, Patrick Honohan and Donal Donovan and Paul Gorecki and Raque Mottiar (2010) http://mpra.ub.uni-muenchen.de/24896/1/MPRA_paper_24896.pdf Whelan, Karl (2012). “ELA, promissory notes and all that: the tax costs of the Anglo Irish Bank” http://www.karlwhelan.com/IrishEconomy/Whelan-PRotes-September2012.pdfRegling and Watson, 2010: a preliminary report on the sources of the Irish Banking Sector Crisis, http://www.betterregulation.com/external/A%20Preliminary%20Report%20on%20The%20Sources%20of%20Irelands%20Banking%20Crisis.pdfMisjudging Risk: causes of the systemic banking crisis in Ireland ( Nyberg, 2011) http://www.bankinginquiry.gov.ie/Documents/Misjuding%20Risk%20-%20Causes%20of%20the%20Systemic%20Banking%20Crisis%20in%20Ireland.pdfThe Irish Economy Today: Albatross or Phoenix http://www. .esri.ie/UserFiles/publications/WP384/WP384.pdf