been appropriate. third, the speed of the required bank deleveraging risked imposing substantial fire sales of assets, which would add to the losses of the irish government. accordingly the risk was high that, at the end of the three years of the programme, the indebtedness of the government, taking account also of the servicing costs of that indebtedness, would be too high for the government to have access to the market at any reasonable terms, and would give rise to the need for a second programme and a prolonged period of uncertainty. so why then did ireland agree to enter the programme? first, because despite these shortcomings, it nevertheless offered the least painful path for fiscal adjustment : that is, the who placed on record that it was “ difficult to state categorically ” that government debt would, “ with a high probability ”, “ be reduced to sustainable levels in the medium - run ”. bis central bankers ’ speeches most gradual path relative to anything else that could reasonably have been expected at that time. 2 essentially, no - one was willing to lend to ireland any more money to allow a more gradual adjustment. indeed, a comparison of the irish programme with what was called for in other programme countries reveals that the irish fiscal adjustment, though effective, was more gradual than most others. that the troika were prepared to go along with a more gradual path may be attributable to the fact that ireland entered the programme with still sizable cash balances, which could be employed alongside the available official funds to smooth the adjustment path. in this way ireland ’ s prompt entry into the programme ( not waiting for months until all cash had been exhausted ) provided valuable room for manoeuvre. from the lenders ’ point of view, it was thought appropriate to proceed with the loan despite the unpromising calculations, in the light of the likely spillover effects on other member states of an irish sovereign default. in short, from the irish point of view, proceeding with the official borrowing was the best thing to do, even though what was on offer was disappointing. given the large primary deficit that then prevailed, any alternative would have been much more painful for the irish people in terms of drastic cuts in services and increases in taxation. what this involved was not merely substituting official for privately - held debt, but also a substantial part of what was being provided was going to pay for further primary ( i. e. non - interest ) deficits for the full period

as needed to control the fed funds rate. the committee will continue to test features of the on rrps to determine how a facility might best be structured to supplement ioer in the control of the funds rate while limiting the potential for unintended effects in financial markets. given the range of available tools, i am confident in our ability to raise short - term interest rates from the zero lower bound when the time to do so arrives. nevertheless, the fomc is prepared to adjust the details of its approach to policy normalization in light of economic and financial developments and the desk stands ready to innovate in order to efficiently and effectively implement policy consistent with the committee ’ s directive. thank you. bis central bankers ’ speeches