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Central Bank dealing with a lot of change

By Brendan Keenan

It's regime change, as well as a change of address, at the Central Bank - but how different will things be? They are fitting out the new headquarters down by the docks but fitting out a new mindset is a more challenging affair.

The new address was meant to read 'Anglo-Irish Bank', of course. The fact it doesn't has much to do with the failings of the Central Bank - more than the Oireachtas banking inquiry was willing to probe.

'Irony' does not seem sufficient to describe the skeleton of what should have been Anglo being fleshed out to house the bank. With those ghosts somewhere in the steelwork, it is even more important that the regime be brand new and properly fitted-out as well. In his address to the Institute for International and European Affairs last week, governor Philip Lane insisted that it was.

Dr Lane stressed the fact that there is now a single EU supervisor - the European Central Bank in Frankfurt. This is indeed a dramatic change. In which context, the insistence by Dr Lane that Department of Finance officials should not attend up to 17 meetings with IMF staff on bank and insurance supervision would seem to indicate a fundamental change of attitudes.

He is, after all, only the second governor not to have come from the ranks of the department itself.

Anyone in the audience for his speech was bound to have noticed his own regime change, from senior academic to central bank governor. He was not shy about illustrating the bank's new power - backed by the EU legislation of the banking union - and its independence, including when it comes to hiring staff and spending money. It was also a fairly masterly display of Central Bank speak, where what is between the lines is more important than what is on them.

In this he differed from his predecessor, Prof Patrick Honohan (who was also in the audience). To the end, he retained a quizzical air about the whole job, and regularly seemed to question it. That could, and did, cause trouble, but it was reassuring in its way.

One never thought one would have qualms about the Department of Finance getting its comeuppance, but qualms there are. The bank was always a creature of the department, but since CJ Haughey's blitz on the constitutional proprieties, the department had increasingly become a creature of the politicians (other departments always have been). The consequences of the resulting incompetence and subservience at the bank are, alas, all too painfully obvious.

Belfast Telegraph


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