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The ECB threatened to withdraw bank funding from Ireland if the Government didn't take a bailout, it has emerged.

ECB president Jean-Claude Trichet warned former Finance Minister Brian Lenihan in a secret letter that the "exposure of the Central Bank of Ireland had risen significantly".

In the document, sent in November 2010, Mr Trichet wrote: "In order to ensure compliance with the prohibition of monetary financing, it is essential to ensure that Emergency Liquidity Assistance recipient institutions continue to be solvent.

"The exposure of the Central Bank of Ireland has risen significantly over the past few months to levels that we consider with great concern. Recent developments can only add to these concerns."

Mr Trichet also called for a "swift response" in the document and urged Mr Lenihan to formulate a "conrete action plan".

He continued: "It is the position of the Governing Council that it is only if we receive in writing a commitment from the Irish government that we can authorise further provisions of ELA to Irish financial institutions.

"The assessment of the Governing Council on the appropriateness of the Eurosystem’s exposure to Irish banks will essentially depend on rapid and decisive progress in the formulation of a concrete action plan in the areas which have been mentioned in this letter and in its subsequent implementation."

The letter was slammed by Anti Austerity Alliance spokesman Paul Murphy.

Mr Murphy said: “The infamous letter published by the Irish Times today of 19 November 2010 to then Minister Lenihan is nothing short of a ransom note demanding that Ireland enter a bailout. The hostage is the Irish banking system, which is threatened with collapse through the withdrawal of Emergency Liquidity Assistance.

“It is now confirmed without question that this was a bailout driven by the interests of the Euroepan banking system, rather than the interests of people in Ireland. The letter includes a demand for ‘decisive action’ in ‘fiscal consolidation’, in other words the kind of savage cuts and extra taxes that have destroyed lives in the last years.

“The previous government, with a gun to its head, agreed to enter this bailout. They could have and should have refused to do so – allowing bondholders and the European banking system to be burnt, while saving ordinary depositors.

"The current government should use the publication of the letter to demand the retroactive recapitalisation of the Irish banking system. It is very unlikely to vigorously do so, because, like the government before it, it is more interested in remaining in the good books of the ECB and European establishment.

"The letter adds to the weight of argument for a repudiation of the banking debt."