Sunday 22 September 2019

Newsmaker: Philip Lane, new Governor of the Central Bank

Professor Philip Lane arriving for the Oireachtas Banking Inquiry
Professor Philip Lane arriving for the Oireachtas Banking Inquiry Newsdesk Newsdesk

It's a big week for Trinity economics professor Philip Lane, who formally takes over as Governor of the Central Bank.

He enters Dame Street amid controversy over the paying of secret bonuses to Central Bank staff, which the bank said were aimed at employee retention.

The trade union Unite claimed the bank was in breach of public sector pay rules introduced during the recession, and is taking legal advice. What's more, the bonuses came after the bank plugged a hole in its pension fund by hiking the levy on banks, insurance companies and brokers.

Dealing with the fallout will put Prof Lane's management skills to the test - an area where the academic was seen to have less experience than his ultimate rival for the job, Department of Public Expenditure and Reform secretary general Robert Watt. Mr Watt's ministerial master Brendan Howlin went to bat for his man in Cabinet, making the point that though he did not oppose Prof Lane's appointment, the job called for someone who had managerial experience - an area seen as a strong point for Mr Watt, who is tasked with reforming work practices in the civil service.

But Mr Watt lost the battle and now Prof Lane is to take charge of a sprawling organisation employing around 1,400 staff. He's a long way from Trinity's ivory tower.

One challenge that seems to have receded, however, is Merrion Street's lukewarm attitude to the Bank's mortgage caps. Finance Minister Michael Noonan has spent a lot of time talking about reviews of the caps, which eventually were introduced in a watered-down form compared to what Dame Street originally proposed. In a September interview, Mr Noonan voiced builders' concerns that the rules were too restrictive, adding that the bank should conduct a review and that he would accept the outcome.

However, last week Mr Noonan told the Dáil that a year needed to elapse before a proper review could be conducted. That would put Prof Lane on the spot in February.

Prof Lane's new job will also see him join the Governing Council of the ECB, which is hoovering up bonds around Europe in an attempt to inject some life into the stagnant European economy. It doesn't seem to be working. The question now is: how long can this continue? Will Prof Lane try to rein in Mario Draghi's appetite for QE?      

Irish Independent

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