CENTRAL BANK REFORM:THE ROLE of the Central Bank is to be reformed to place it "at the centre of financial supervision and financial stability oversight", the Dáil was told.
The move will constitute an overturning of the structure whereby the Central Bank and the Financial Regulator operate separately though under the same roof. That structure, which included separate boards and independent responsibilities, was introduced by the government in 2004.
Minister for Finance Brian Lenihan said the new structure would provide for the full integration and co-ordination of the prudential supervision and stability of individual financial institutions, with that of the financial system as a whole.
“The Central Bank of Ireland will in the future be headed by a commission, chaired by the governor,” Mr Lenihan said.
“These important structural changes will be complemented by significant new resources and additional expert staff to widen skill sets and enhance market-based knowledge.”
He said he had asked the former deputy governor of the Bank of England and former member of the UK monetary policy committee, Sir Andrew Large, to advise on the process to select a new head of financial regulation within the new institutional structure.
“This search will be wide ranging and the person chosen will be of the calibre, reputation, experience and expertise to lead the reforms of financial regulation that I have outlined.”
The former chief executive of the financial regulator, Patrick Neary, announced his decision to take early retirement earlier this year. John Hurley is the current governor of the Central Bank.
Mr Lenihan said a key pillar of economic renewal is a well regulated financial system.
“This is essential for domestic and international confidence and credibility. The actions of those who have tarnished the reputation of Ireland will be dealt with through the appropriate processes.”
He said the reputation of the regulatory and supervisory structures had to be restored. “We want to send a strong signal that the types of practices followed in some of our institutions are unacceptable; that the regulatory structures will be strengthened; that decisive action is being taken to repair banks’ balance sheets; but that Ireland remains committed to the continued development of a soundly based, well-regulated and competently supervised financial services sector.”
