The Oireachtas approved it, disgruntled property developers failed to derail it and the bad bank agency that the government deems will clean up the Dublin banks' mess is finally getting down to work, unspooling over €80bn worth of entangled devalued commercial loans that the lenders advanced at home and abroad. But even if the National Asset Management Agency (Nama) meets its late autumn schedule, it still faces its sternest test: the verdict of the international ratings agencies.

Ireland is not alone in setting up a bad bank structure or similar scheme to solve the problem of bad loans, or impaired assets, clogging up national banking systems. The European Central Bank in February published a road map of the different approaches countries could take to clean up their banking asset messes. Like Ireland, Germany has also chosen a bad bank or bad banks' solution.

Nama architect Peter Bacon argued convincingly that the insurance approach the British have adopted would fall short of cleansing Irish banks. Some analysts have mused whether next year's British general election convinced the authorities there not to set up a bad bank, because their asset insurance scheme, similar to a balloon installment plan, defers the cost to the British taxpayer. But the bill will eventually have to be paid. That leaves Germany out as the pioneer in setting up a bad bank in this economic slump.

Nama officials will be hoping that its bad bank is seen in a more favourable light abroad, after ratings agency Moody's gave Germany's bad bank what can only be described as a mixed review.

Last month, the German upper house of parliament approved the creation of a bad bank or several bad banks, facilitated by the Financial Market Stabilisation Agency, or SoFFin, that Berlin set up last year to deal with its financial crisis. The German government published its draft bad bank law in April.

Germany now plans to go ahead and set up a bad bank structure, but unlike in Ireland, several bad banks or special vehicles will hoover up hard-to-value but definitely impaired and devalued toxic assets on the lenders' loan books. SoFFin will oversee the vehicles.

In Germany's case, the toxic loans are potentially more complex and therefore more toxic than those facing lenders here. They involve asset-backed securities such as the billions of euro of distressed assets lurking on the books of the rescued Hyper Real Estate and its Dublin subsidiary Depfa, which may take longer to manage than even the most reckless of loans advance by Irish banks to the riskiest, never-to-be built green field developments.

The bad debts on the books of German banks cover the full alphabet of the financially-engineered products that led to the export of the US banking crisis around the world.

Irish taxpayers coming to terms with taking on the huge risks of loans handed out to a small band of property developers may take some comfort in the fact that they are not taking on unknown liabilities of the kind of impossibly complex assets that taxpayers in Germany will be buying.

International law firm Paul Hastings, which has bid in the latest round of tenders to advise Nama, describe the assets that the German bad banks may purchase like this: "As examples, the materials mention Asset-Backed Securities (ABS), Collateralised Debt Obligations (CDOs) of ABS, Collateralised Loan Obligations (CLO), Residential Mortgage Backed Securities (RMBS) and Commercial Mortgage-Backed Securities (CMBS)."

As in Britain, some experts believe that Germany's looming federal elections in September may have shaped the bad bank structures that Berlin has set up. They appear to be different to the structure Nama has chosen here in the key respect that the German taxpayer will be taking on less of the risk of cleaning up their banks; a lot of the costs will be left with the banks themselves.

The architects of Nama have made no secret of the fact that the taxpayer will take on the costs of the bad bank here upfront, because Irish sovereign debt will increase rapidly in a short time.

You might think it is a good thing for German taxpayers to be spared a significant portion of the cost of their bad bank schemes. Not so, says Moody's, if it fails to solve the banking crisis and impedes economic recovery because the banks are lumbered with paying for the asset bail-outs, earning less profit and lending less money.

This is what Moody's has to say about the German bad bank plan: "In our view the bad banks scheme in Germany falls short of properly addressing the many critical issues facing German banks. Moreover, there are varied concerns that the scheme may not work or may not be taken up sufficiently to have a lasting, positive impact on the system, given the potentially longer-term obligations of banks concerned and uncertainties for stake-holders. The bad bank scheme is therefore considered a small and rather reluctant step in the right direction. In order to find a solution to the persisting solvency problems of the German banking sector, however, we believe that substantially more will need to be done."

However, it is not an altogether downbeat review of the German bad bank plan. Moody's adds: "Nevertheless, the possible benefits should not be overlooked… Hence, bad banks principally can support systemically important institutions without having Germany's public sector [its taxpayers] advancing large amounts of capital upfront. That said, we expect that the approach of using measures that exclude the provision of fresh capital will likely yield limited results."

Nama will be hoping that its reviews are less critical.

Countdown to Nama – - The Check List

The European Central Bank as long ago as February issued what it called "guiding principles" for eurozone countries in devising bad bank schemes or other plans to support impaired assets (loans) on the banks' books.

In April, Nama architect Peter Bacon published his report recommending the establishment of a bad bank within the government's debt agency, the National Treasury Management Agency, as the best way of cleansing the impaired property development loans and associated loans clogging up the banks' books. Brendan McDonagh, the debt agency's financial director, was subsequently named as the interim managing director at Nama.

The ECB framework had recommended that asset support schemes should be voluntary for banks, provide a broad definition of the eligible assets, and provide for risk-sharing between banks and taxpayer. It also said the bad bank or insurance scheme should manage the assets for "a sufficiently long" duration. On valuing impaired assets, the ECB recommended buying the assets at a discount or haircut "when the assessment of market value is particularly challenging". It said bad banks may be favoured over insurance schemes (such as in Britain) when difficult-to-value assets are concentrated in a few lenders.

Significantly, the ECB added that, in return for taxpayer support, "it would be reasonable" to impose commitments on the banks to provide credit when demand exists. "Banks participating in asset support schemes should be monitored in this regard," the ECB said.