During the 1930s, the question of how to fill the vacuum left by Horace Plunkettís declining co-operative credit societies became part of a debate that focused on developing financial systems and structures for the newly independent State. Banks did not cater for small borrowers and were extremely conservative in their approach to lending. As it became clear that the conservative culture of banking was becoming more deeply ingrained, alternatives to banks as sources of credit for those of lesser means were discussed. While pawnbrokers continued to operate in cities, towns and larger villages, there was general agreement that a more acceptable form of credit provision for the lower social classes should be established.
The ongoing slow decline of Plunkettís co-operative credit societies coloured the Irish governmentís attitude toward co-operative credit. Such enterprises could not prosper without its support and given the demands on its limited finances it was unwilling to risk resources underwriting co-operative ventures that history had shown to have failed. So, while in principle, the government supported the idea of a financial service that would cater for the needs of lower income rural dwellers, it unwilling and unable to financially support the struggling societies in the same way the Plunkettís co-operative credit societies had been supported.
This provided an opportunity for the Catholic Church to extend its reach into the economic and financial spheres. Arguments for introducing credit unions were ideologically driven. Credit unions would be anchored in the Catholic social principles espoused in the papal encyclicals Rerum Novarum (1891) and Quadragesimo anno (1931) and modelled on successful movements in other Catholic countries. They would finally break all links with Irelandís earlier Protestant co-operative credit societies.