The Tánaiste has said she had "no sense" of any strained relationship between governor of the Central Bank Patrick Honohan and the Government.

The release of the Central Bank’s annual report on Friday was overshadowed by news of Prof Honohan’s decision to step down.

Prof Honohan confirmed he intends to retire at the end of the year, nine months before his seven-year term was due to end.

‘Sterling conviction’

Speaking in Limerick this Friday, Joan Burton described Prof Honohan as a person of "clear and sterling conviction" who had done huge service to the country.

The Central Bank governor had a professional and amicable relationship with members of the Government, she added.

Mr Honohan has said he is leaving the post because it is the right time to go.

The Tánaiste said finding a replacement would be a priority for the Government.

When asked whether Prof Honohan’s early resignation was prompted by a strained relationship with the Government, as speculated in some reports, Ms Burton said: “I don’t have any sense of that, speaking for myself.”

Public interest

The Tánaiste said the most outstanding thing about Mr Honohan is his “absolute dedication” to the public interest.

“He is somebody who, although from the world of academia, has been extremely pleasant and easy to deal with.

“He is a person of very clear and sterling conviction, but I would have thought he has absolutely business-like and professional and amicable relationships with members of the Government.”

Stressing the important role played by the Central Bank in the country's economic recovery, Ms Burton said: "The outstanding thing about Governor Honohan is his absolute dedication to the public interest in Ireland and to the Central Bank being part of the recovery, and the turning around of Ireland. In fact he has done huge service to the country.

“Governor Honohan has certainly given some previous hints that he might retire at a particular age.

Regulatory model failed

“Clearly the governor will have to put some mechanism in place in relation to his successor, but what is important is that we know from what happened in terms of the crash in Ireland that we had a regulatory model which failed and failed very very badly - to the cost of vast numbers of people in Ireland and vast number of businesses.”

Ms Burton said it is crucial that the independence of the Central Bank is respected, given the role it has played in rebuilding the banks and ensuring they can function “as normal, sensible and prudent lending institutions”.