In addition, a considerable infrastructural deficit has emerged which has implications not just for economic development but for the quality of life in Ireland. With Ireland’s participation in EMU, monetary policy cannot be used to deal with these developments. I will return to these issues later.
As the financial landscape became more uncertain, a broader tightening of credit conditions took hold, with investors becoming less willing to bear risk, more concerned about the valuations of a wide range of complex financial instruments, and more concerned about counterparty credit risk.