European Union (EU) and International Monetary Fund (IMF) investigators are almost certain to uncover significant fraud and corruption in the Irish banking sector, according to a prominent European economist who has worked with the IMF.

Doctor Daniel Gros believes that when Ireland's financial crisis ends the country will need to establish a 'truth commission' to investigate the collapse of the banks.

In Iceland, where a similar commission investigated fraud in its own system, investigators found that senior politicians, regulators and bankers had all contributed to bringing down the country’s economy.

Gros now believes the European Commission, the European Central Bank and IMF are almost certain to expose significant corruption in the country’s banking system. He added that he believes the losses of 50 billion to date will just be the tip of the iceberg.

Gros says it's simply impossible that just months after stress tests gave the all-clear, losses of more than 25 percent of the country’s GDP appeared to come out of nowhere.

"It’s not like the USA with a highly complicated system. Its simply three to five banks with loan books. It’s typical of what can happen in a small country where everyone knows everyone and as long as everything is going well, nobody notices," he said.

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