The Irish financial crisis deepened yesterday with fears arising that another full-blown bond crisis will start in Ireland and end in Washington.
Bank of Ireland, the country's largest lender, signalled last week it had suffered a 10 billion ($NZ17.6 billion) outflow of deposits from early August until the end of September.
Allied Irish banks, which will be more than 90% owned by the State following a rights issue later this year, will issue a trading statement late this week with details about the funding situation.
Reuters reported that eurozone ministers had agreed to send a joint European-IMF mission to Ireland that could prepare the way for a bailout to prevent its debt crisis spreading to other countries.
The ministers said after talks that the European Commission, the International Monetary Fund and the European Central Bank team would focus in talks starting this week on helping Ireland's banking sector, if Dublin decided to ask for aid.
EU sources are indicating that possible aid under discussion for Ireland ranges from 45 billion to 90 billion.
Ireland had said the bill for bailing out its lenders could top 50 billion but investors fear the figure could be worse.
Craigs Investment Partners broker Chris Timms said it seemed inevitable a bailout was on the way.
"Why send a team to Dublin if you are not going to give a bailout?"The Irish Government had been reluctant to agree to a bailout as it did not want to adopt the austerity programme adopted by countries such as Greece, he said.
The Government wanted to sort out its own problems and it was hoping to avoid a humiliating rescue that could further weaken its grip on power.
But it had left the door open to aid for its banks which had been driven to the brink by the global financial crisis and a property market crash.
"They don't want to be told by other parties how to run the economy. If they have the bailout, there will be conditions attached."
EU president Herman Van Rompuy said yesterday the EU would not survive if it failed to overcome a debt crisis plaguing the euro single currency.
"We're in a survival crisis. We all have to work together in order to survive with the eurozone because if we don't survive, the eurozone will not survive with the European Union," he said.
Mr Timms said one of the major issues was the comparative financial strengths of different parts of the eurozone.
Germany was very strong and the low currency would be helping its exporters.
However, the "PIIGS" - Portugal, Greece, Ireland, Italy and Spain - were weak economically but were all linked by one currency.
The challenge in Europe was how to apply one currency across economies of different strengths.
