Business Irish

Monday 19 February 2018

Exclusive: Honohan admits - 'I'm an ideas man, not an implementation man'

Patrick Honohan, Governor of the Central Bank at a briefing about the new mortgage rules at the Central Bank in Dublin
Patrick Honohan, Governor of the Central Bank at a briefing about the new mortgage rules at the Central Bank in Dublin
Philip Ryan

Philip Ryan

Central Bank Governor Patrick Honohan conceded he is an "ideas man not an implementation man" in a personal video message to staff announcing his decision to retire before the end of the year.

Mr Honohan, who announced his shock retirement in April, admitted he knows more about economic policy than he does about the Central Bank's management and reward structures.

In the video, which was released under the Freedom of Information Act, Mr Honohan said he was reluctant to say the financial crisis is over - but said the "storm has passed".

"Implementation rather than policy innovation is now the key," he said. "And as you know I am much more of a policies and ideas man than an implementation man. I know a whole lot more about details of central banking policy rather than about the organisation, their management, reward structures," he added.

At the height of the financial crisis, Mr Honohan, a former Trinity College, Dublin, professor, was appointed by the late Finance Minister Brian Lenihan. However, during his tenure he struggled to keep key staff including Matthew Elderfield and Fiona Muldoon

Yesterday, Fianna Fail finance spokesman Michael McGrath said Mr Honohan was "overall a breath of fresh air", but was critical of his failure to act sooner on variable interest rates and mortgage arrears.

"The last number of years were really a lost period when it came to dealing with the mortgage arrears crisis," Mr McGrath told the Irish Independent.

Mr Honohan announced his retirement as the Central Bank recorded a €2.1bn profit.

In the video, he said the Central Bank achieved "some clawback" on costs of the banking crisis, and policies needed to stabilise the financial sector are "largely in place".

He told employees they put in place "safe options" to deal with the mortgage arrears crisis and the lack of finance for small business. However, he warned the full impact of these measures will "take some time".

"I think we have brought into play the necessary policies that are within our mandate. We have a good chance of success without risking too much by way of the adverse side effects.

"It is easy to say the crisis management phase is over. I don't want to exaggerate the degree to which the crisis damage has been fixed in Ireland.

"I am fully aware of the remaining legacy of the crisis - severe damage to balance sheets, households, companies, banks. Unemployment is still high but a degree of calm has no doubt returned to the financial environment," he added.

Irish Independent

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