Every unhappy peripheral is unhappy in its own way

From the IMF’s Global Financial Stability Report. There’s a recurring controversy in Ireland as to whether the country was somehow bounced into a bailout by the European Central Bank in November 2010. The ECB’s reluctance to release all its communications with the Irish Department of Finance in that month has fed the suspicions, but the chart above should lay to rest to notion that Ireland was singled out by the ECB for special treatment. Ireland singled out itself. Exposure to the central bank system (ECB + Central Bank of Ireland) was rocketing from late summer 2010, as the 2 year blanket guarantee of September 2008 expired and Irish banks could find nowhere else but central banks to refinance their bond cliff of September 2010. Add to that the inability to convincingly upper bound the Anglo losses, and you had seemingly open-ended central bank exposures unlike other peripheral then or since. Incidentally, if spikes in this variable (central bank borrowing as share of GDP) are a leading indicator, the dashboard is flashing for Spain now.