Irish Taoiseach (Prime Minister) Brian Cowen

The Irish government is extending its bank guarantee scheme until the end of the year, it was announced yesterday.

irish government guarantees for short-term bank liabilities had been due to expire at the end of this month, but the decision has been taken to extend them until the end of this year.

Irish Finance Minister Brian Lenihan described the extension as an important support to the Irish banking system to help maintain the overall stability of the sector. Six institutions are covered by the guarantee.

Irish Taoiseach (Prime Minister) Brian Cowen insisted that the adjustment was all part of the operation of the market.

'There has been turbulence generally in international bond markets for some time,' Cowen said, describing the rise in the cost of borrowing as part of the ebb and flow of sentiment.

He also tried to calm market fears that Ireland would fail to get its financial affairs in order.

'We are absolutely committed to maintaining our plans and imposing the budgetary discipline that we set out with the European Commission, Cowen added.