years, allowed the government to take the decision to exit the programme on schedule at the end of 2013. despite the risks and the pressures involved at the outset, recourse to the eu - imf loan proved to be a successful policy move for ireland, limiting the need for fiscal austerity ( because funding was made available in amounts and at costs far below what the market would have offered ), and underpinning a relatively rapid return to confidence. successive governments ’ adherence to the programme, in difficult political circumstances, helped restore ireland ’ s international the discussions that took place in the margin of the programme negotiations about possible bail - in of bank senior debt have been described by several participants ( cf. honohan, 2014b ). in the event, despite the troika ’ s insistence on higher capital standards and more rapid deleveraging of the banks, the additional capital required as a result of the aggressive pcar2011 stress test of march 2011 was met with less than a half of the pencilled - in figure, thanks in part to the bail - in of subordinated debt holders. this could, for example, have been alleviated through the purchase by a european entity of equity capital in the banks. unable to provide the normal assurance to their decision - making bodies that the prospective debt profile was, with high probability, sustainable, the imf staff invoked a “ systemic risk waiver ” that had been created only a few months earlier in the context of the greek loan ( cf. schadler, 2013 ), in their recommendation that the imf provide this large loan to ireland. bis central bankers ’ speeches reputation for disciplined macroeconomic management, a reputation essential for sustained recovery of employment and incomes. 15 4. promissory notes the origin of the pns ( for anglo irish bank, inbs and ebs ) has been explained in section 2 above. the pns were created and provided to these banks in order to ensure that they complied with regulatory capital requirements. as liquidity drained from the system in the last months of 2010, these pns became part of the collateral pledged by anglo to the central bank of ireland in return for the growing amounts of ela that were being provided. both before and after entry into the eu - imf programme, the question of finding a long - term solution for the huge stock of ela was increasingly pressing. ecb rules specify that ela should be short - term ; but there was no obvious source of

##le capital adequacy standards have applied. the bank is currently a party to the protracted discussions to developing these standards to deal with the changing financial environment. our experience in the euro area i would like to turn now to our experience with the single currency. in the run up to the euro and in its early phase, very buoyant economic conditions in ireland tested our capacity to cope with the single currency. with gdp growth running in excess of 10 per cent and unemployment at historically low levels, capacity constraints inevitably resulted in increasing inflation, which exceeded 5 per cent for much of 2000 and 2001 ; this was more than twice the euro area average. by contrast, economic growth in the core euro - area economies was sluggish and, with a single monetary policy, monetary conditions are set by reference to economic conditions in the euro area as a whole. with relatively low nominal euro - wide interest rates, high inflation and inflation expectations in ireland pushed real interest rates into negative territory. in addition, the euro weakened substantially after its inception, further easing monetary conditions in ireland. until recently, these easy monetary conditions contributed to some widening of ireland ’ s inflation differential over that of the euro area. however, the strengthening of the euro through 2003 and slower economic growth than previously have reduced inflationary pressures. this year, the bank forecasts inflation to be about 2 per cent. although buffeted by the information and communications technology sector shock in 2001 and the more uncertain international economic conditions in the recent past, the irish economy has performed well. economic growth ( gnp ) last year was 3. 3 per cent, amongst the highest in developed economies, and employment has continued to perform strongly. unemployment — currently 4. 6 per cent — is amongst the lowest of eu countries and is very low by historical standards in ireland. this good performance in a more difficult economic climate reflects, inter alia, the resilience and flexibility of the labour market. economic stabilisation in a region of a monetary union is left to other areas such as fiscal policy, and structural, including incomes, policy. fiscal policy has been managed prudently in ireland for many years. this allowed the automatic stabilisers to soften the impact of the ups and downs of the economic cycle. at the same time, from a position of substantial surplus in 2000, the government ’ s borrowing requirement has conformed to the requirement of the stability and growth pact to be kept close to balance or in surplus. last year, for