Is the Governor of the Central Bank “representative” or “independent”?

The ‘controversy’ arising over the Governor of the Central Bank of Ireland Patrick Honohan’s endorsement of a Yes vote, is possibly the least important aspect of his speech to the IEA.

Padraig Mac Lochlainn believes Honohan should not have publicly said Yes because:

“…public servants, which Governor Honahan is, are paid by the taxpayer and therefore representative and accountable to all taxpayers.”

The Minister of Finance demurs:

“Patrick Honohan is independent as governor of the Central Bank and is quite free to express his view. He does not require permission from the Government and he does not seek and we do not give him advice as governor of the Central Bank.”

There you have it…

– “Representative” [like a TD – Ed]

– Or “Independent” [like a Northern Ireland Attorney General – Ed]

So which is he?

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  • Alias

    The Minister for Finance fraudulently referred to the Governor of the Central Bank as “independent” yesterday. I call it fraud because his officials at the Department would have at least informed him that he is an agent of the ECB, so even if the minister is ignorant of the Maastricht treaty, it is unlikely that his officials are.

    The fraud, of course, is doing exactly what he accused the Shinners of doing: cutting quotes to leave a bogus impression. It’s true that the Central Bank is independent of the government, but it isn’t true that it is independent of the ESCB. It is a protagonist in the battle between eurosystem interests and Irish interests.

    The minister wants to hoodwink the Irish into thinking that the governor is offering neutral advice that is designed to promote the national interest, when he is doing nothing of the sort. The Irish Central Bank is an instrument of the ECB and takes its policy and guidelines exclusively from that source, acting to promote its interests.

    He is only independent from the government because the state gave away the applicable sovereignty, but he is not independent as an agent of those who now own that sovereignty and operate it to further their economic interests.

  • Alias

    “He does not require permission from the Government and he does not seek and we do not give him advice as governor of the Central Bank.”

    Quite true, but does he mention that is it actually unconstitutional for the government to offer him any advice or for the governor to put the national interest ahead of the EU’s interest?

    ARTICLE 107
    When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body.

    The Community institutions and bodies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.

    This is the role of the NCB:

    ARTICLE 105
    5. The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the Financial system.

  • Alias

    Further to the “independence” of the Central Bank:

    Article 14.3 of the protocol annexed to the Lisbon treaty declares that:

    “The national central banks are an integral part of the ESCB and shall act in accordance with the guidelines and instructions of the ECB. The Governing Council shall take the necessary steps to ensure compliance with the guidelines and instructions of the ECB, and shall require that any necessary information be given to it.”

    This makes it explicit that the Central Bank is an executive instrument of the ECB.

    Aerticle 14.4 declares that:

    “National central banks may perform functions other than those specified in this Statute unless the Governing Council finds, by a majority of two thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. Such functions shall be performed on the responsibility and liability of national central banks and shall not be regarded as being part of the functions of the ESCB.”

    This limits the role and functions of the Central Bank to the promotion of the eurosystem’s exclsuive interests in instances where the Central Bank might consider a role or function that would conflict with its duty to promote the eurosystem according to statute. In other words, it cannot argue for any fair deal for Ireland where this fair deal is less favourable to the eurosystem. It is, therefore, an agent of the eurosystem.

  • huntsman

    The present Governor of the Central Bank does not have a particularly good record. His credibility was badly damaged when he assured everybody that the Irish banks were in good condition after a stress test. Shortly afterwards the mendicants were back again with their begging bowl looking for billions more, so much for his judgement.

    This is also the man who voted for a rate increase at the ECB when Ireland’s economy was going down the sinkhole. Thankfully that error is being pulled back but Holohan is linked with it forever.

    He has been nothing short of disaster.

  • wee buns

    Who shall spare us (‘official’ start of campaign is tomorrow), from every Tom/Dick/Harry in a powerful job being dragged out by the publicity machine that is ‘tick the Yes box – it’s the only box in town’ ?

    Not one mention of the illegality of this banker’s comments in the weekend newspapers, but instead, as per usual & ad nauseam, rampant pro EU ravings by Noel Whelan & Stephen Collins. Argg.