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Originally Posted by jfman
This is where a Central Bank comes in handy.
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The governments of Ireland etc, COULDN'T borrow. They ran out of money.
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Ireland had already exhausted all other avenues of funding: “We had already raided the pension fund and borrowings on the sovereign bond markets – which we were priced out of – in 2010,” Namawinelake explains so the option considered to be the best in the circumstances was to issue a promissory note.
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The repayment works like this: The government pays the money to IBRC, which gives it to the Central Bank of Ireland, which then destroys this money. This is done electronically in case you were thinking they were burning a huge wad of €100 notes on Dame Street.
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