Ireland's shortcomings in underwriting its troubled banks is now a global responsibility that should be addressed, the country's former Prime Minister John Bruton told CNBC on Monday.
The Irish government spends 3.1 billion euros ($4.2 billion) a year to help underwrite Anglo Irish Bank and Irish Nationwide, both of which were hit hard during the housing crash of 2008, and are now part of Irish Bank Resolution Corporation Limited.
Irish policymakers now wish to convert this annual liability into a long-term government bond to ease its debt burden but Reuters news agency reported on Saturday that the ECB have rejected the proposals.
"There is, we would contend in Ireland, a global and European responsibility to help us now resolve this issue and get back into the markets," Bruton told CNBC Monday, explaining that the current deal is "sucking money" out of the economy in the short term.
(Read More: Irish PM: Bailout Conditions 'Unfair')
"Government did this in order to prevent a bank run, in a particular bank, which could have led to contagion all over Europe....so in a sense the Irish taxpayer put her resources on the line in order to protect the global economy."
Directly refinancing banks is against the rules of the EU treaty. Under the current structure, the Irish government will spend 3.1 billion euros each year until 2023 to aid the two banks via a promissory note. The two banks then use the money to help pay-off the Irish central bank.
The European Central Bank wouldn't be drawn on the news that it had dismissed Ireland's proposals, telling CNBC.com that the talks are ongoing and any conclusions about the outcome are "premature".
Ireland, the second country to receive a bailout after Greece, is currently fighting on two fronts. Policymakers traveled to Brussels last week to try to seek an extension on their EU/IMF bailout which granted the country 67 billion euros ($89 billion) in financial support till the end of 2013.
(Read More: )
Speaking in Chile on Sunday, current Deputy Prime Minister Eamon Gilmore, called for solidarity and certainty in Europe and highlighted that a failure to conclude negotiations on the promissory notes would have a potentially "catastrophic effect".
"The question is, is there some other way with dealing with this very big liquidity demand on the Irish taxpayer, spreading the burden more evenly over time," former Irish Prime Minister Bruton said.
"I think the issue is in great measure a legal problem rather than a political problem at this stage."
But Bruton added that a solution would be more likely after the German elections, alluding to the possibility that a German Chancellor would be more likely to push forward actions without the threat of upsetting the country's taxpayers.
Stockbroker NCB has noticed that politicians are showing a softer line towards Ireland, but agreed that receiving the backing of the ECB for the promissory notes would be difficult to secure.
"We expect to see further twists in this tale as we move nearer to the next payment deadline," it said in a morning note.
—By CNBC.com's Matt Clinch