It would not have worked in Ireland case for a simple reason. We have two debts, budget debt and banking debt. Iceland, AFAIK, had one debt, their banks.
In order to be able to tell banks to gi f**k themselves, a country must be able to cover their costs, Ireland couldn't. Therefore we needed outside money to bridge our budget deficit, otherwise no pay for civil/public servants, no social welfare, no daily services etc. The people lending us the money to bridge our budget deficit also wanted the banks saving to stop the spread of contagion.
If a country could cover it's debts, then fin