Was the financial catastrophe that has hit Ireland since 2008 an accident or is it due to bad policies? It is natural for economies to experience ups and downs during different periods, often being subject to a boom-bust cycle. The financial catastrophe that has hit Ireland since 2008, however, was definitely no accident. A global financial crisis followed in the same year, which would obviously have a negative impact on Ireland: “it has contributed very significantly to the current problems of the [Irish] economy” (Fitzgerald, 2011). However, the policies undertaken by the Irish Government, the Central Bank and the ECB are the main cause of the prolonged duration and depth of the Irish recession. The origin of the Irish recession stems from the monetary policy implemented by the Central Bank and the ECB, and the introduction of the euro in 1999. The integration of the EU financial markets has provided Irish banks with access to financing on the international market (wholesale), allowing Ireland to borrow cross-border without exchange rate risks; as a result, banks were able to expand their loan portfolios to a large extent. This new source of finance allowed Irish banks to lend well beyond their means of domestic deposits and shares. The potential for large profits also existed, as Irish banks could borrow short-term at a low interest rate and lend long-term at a higher rate. The rate charged to customers was still relatively very low, and at a time when the economy was growing rapidly and incomes were rising, people were taking advantage of cheap credit and borrowing excessively. The average family took out both small loans and large mortgages; small and medium-sized enterprises have taken on more debt for expansion and business purposes, and real estate developers have undertaken...... half of the paper ......Social Stability Policy, Patrick Honohan and Donal Donovan and Paul Gorecki and Raque Mottiar (2010) http://mpra.ub.uni-muenchen.de/24896/1/MPRA_paper_24896.pdfWhelan, Karl (2012). “ELA, bills and all that: the fiscal costs of Anglo Irish Bank” http://www.karlwhelan.com/IrishEconomy/Whelan-PNotes-September2012.pdfRegling and Watson, 2010: a preliminary report on the sources of the Irish banking system Crisis , http://www.betterregulation.com/external/A%20Preliminary%20Report%20on%20The%20Sources%20of%20Irelands%20Banking%20Crisis.pdf Wrong risk: causes of the systemic banking crisis in Ireland (Nyberg, 2011) http ://www.bankinginquiry.gov.ie/Documents/Misjuding%20Risk%20-%20Causes%20of%20the%20Systemic%20Banking%20Crisis%20in%20Ireland.pdf The Irish economy today: Albatross or Phoenix http:// www. .esri.ie/UserFiles/publications/WP384/WP384.pdf