And it did so by virtue of its legal tender status. This meant that notes and coin facilitated transactions in anonymous market situations since the seller never had to concern himself/herself with the creditworthiness of the buyer.
This is one factor explaining the higher volatility of Ireland’s economic aggregates relative to other economies. For example, Central Bank research shows a significantly higher response of Ireland to negative global shocks than our larger trading partners. [16] Our research also shows that growth prospects in small countries are more susceptible to negative shocks than larger, more diversified countries.