Following the Irish government’s announcement last week that they would be injecting $2 billion in to the commercial bank, Anglo Irish Bank, the government backtracked, announcing plans to nationalize the bank.

An international financial crisis has resulted in a number of international banks being nationalized, as fears of difficult economies and a financial collapse mount in a number of countries.

“The worse thing that can happen from Ireland’s point of view is that a bank can fail. If a bank fails the damage to the country, the reputational [sic] damage to the country, in trashing deposits and refusing to honour obligations, would be enormous,” said the Finance Minister, Brian Lenihan.

Shareholders in the company were outraged at the news, and analysts spoke the risk of a collapsing financial system due to placing the responsibility of the bank in the hands of taxpayers and those who control the money supply.

The Finance Minister also announced plans to create a government mandated “bad bank,” where lenders could park their bad and nonconverting assets to get them off the balance sheet. Details of how this system would function are unclear at this point, but a number of analysts believe that Anglo Irish may be converted to be this bank.

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