ECB Opinion on the restructuring of the Central Bank and Financial Services Authority of Ireland

The ECB has issued its opinion on the government’s plans to restructure the CBFSAI – you can read it here.

12 replies on “ECB Opinion on the restructuring of the Central Bank and Financial Services Authority of Ireland”

Interesting that they open with a criticism of deficiencies in the existing legal framework i.e. the lack of a consolidated statute for central banking — a criticism which dates back to 2002.

The government found the time for a lot of other legislation since 2002.


Off- thread …. but
There was no shortage of criticism at the INET conference held in Cambridge this weekend [from News n Economics].

Joseph Stiglitz reiterated the sharp divergence between representative agent models and reality.
James Galbraith went the even more aggressive route by suggesting that REH (rational expectations hypothesis), EMH (efficient markets hypothesis), RAM (representative agent models), and DSGE (dynamic stochastic general equilibrium models) be buried beneath a bed of garlic below Keynes’ quarters with guards standing atop the burial site. (This was not a direct quote but very close.)
Simon Johnson pressed the need for more action to relieve the systemic pressures coming from the still top-heavy US banking system.
Dominique Strauss-Kahn charged global policymakers of being complacent with monetary and fiscal policy over the last decade. They were lured in by ostensibly stable growth, when in fact the financial foundation was crumbling below (after, of course, he was disrupted by a globalization protest with the catch phrase “the IMF is the Problem not the solution”).

Think this might be worth a thread? Who agrees with Galbraith? or with Stiglitz? I won’t mention rationality …


Aw C’mon guys – surely not afraid of Gentle Joe Stiglitz and Jimmy Galbraith! May I safely ignore all that ‘stuff’?

All the legislation in the world is of zero value if those appointed to discharge responsibilities and exercise statutorily delegated powers fail to do so. Since the late 1990s Ireland has constucted an elaborate edifice of regulatory arrangements across many sectors that, at first sight, looked like international best practice. But it was just a facade, as it was entirely subservient to explicit or implicit government policy – implicit in the sense that the regulators were captured by the businesses they were supposed to be regulating. Consumers, being at the bottom of the food chain, not surprisingly, were hosed in the process of enriching the vested interests.

The appointment of Governor Honohan and Financial Regulator Elderfield gives some hope that regulation in the public interest will be pursued – at least in the banking and financial sectors (though a much wider shake-up is badly required). But the “forces of darkness” remain entrenched and we can only hope that the compromises that will be forced upon them will not render their positions untenable.

The theory is very interesting to wonks but in order to retain a questionable legitimacy, most “big name” economists may be forgiven for ditching the obvious dross and looking to recycle what may be relevant. But as RMS Titanic goes down, to the strains of Auld Lang Syne from the orchestra, some are hacking at the woodwork and trying to fashion their own ark.

Some of the bonhomie has gone from the jousting as the reality sinks in.

TPTB must retain some economists, hence promotion of them in the msm, but ultimately, they will have to shift for themselves.

Feeling lonely anyone?

Paul Hunt
The IFSC is excluded from the purview of these brave men?

What wonders await us there? Who will show them to us? How much will it cost us, as we find out that oops!, we got it wrong again?

Facade is very important to banking. Always was and will be. The greater the confidence trick, the more important that appearances are. Auditors are hiding a great deal. Management are hiding even more…… And the regulators know the least. That way, the government is in bliss. And denial is not just a river.

The glory team cheering Ireland Inc hope that we can pull through on appearances alone as in the past. But with income dropping the old Ponzi schemes fail.

There are more Anglos yet to come? Look in the IFSC and explain why they have no significance for taxpayers?

@Paul Hunt
Yep. The edifice that was set up might more accurately be called the Financial Unregulator as it stymied all attempts to leash the financial services sector by abrogating powers to itself; powers that it wrapped in a gimp costume and put in a box marked “danger – do not open even in event of really big emergency”. The box was then buried in the basement of the Central Bank next to Joe Jacobs secret plan for what to do in the event of a particular nuclear emergency at Sellafield only.

Comments are closed.