Patrick Honohan to head Central Bank

FINANCE Minister Brian Lenihan formally appointed former World Bank economist and Trinity College Dublin economics professor Patrick Honohan as the new governor of the Central Bank yesterday.

Mr Honohan replaces John Hurley, who is set to retire at the end of this month.

Mr Lenihan said that Mr Honohan has already provided valuable advice to his office and “will be of enormous value in working through the difficulties which the Irish financial system faces”.

Mr Honohan’s appointment has been broadly welcomed. TCD finance professor, Brian Lucey called it “an extremely positive move”, while Fine Gael finance spokesperson, Richard Bruton said the move could mark a new era in regulation for the Irish financial sector.

“I welcome the fact that this appointment involved a broader search for an appropriate office holder. The tradition of automatically appointing a former secretary general from the Department of Finance has not always been the best option.

“Professor Honohan is eminently well qualified and will bring considerable experience to this important post – particularly in relation to the difficult problems facing the banking sector,” Mr Bruton added.

Mr Honohan’s appointment does indeed break with the tradition of filling the Central Bank governor role with top ranking members of the civil service. Mr Hurley, himself, is also a former secretary general.

He was originally due to leave office in March, but accepted the Government’s request to stay on. He will now leave office on September 25.

Mr Honohan worked as an economist at the Central Bank between 1976 and 1984 and has been at TCD (where he has been professor of international financial economics and development) since 2007.

He recently proposed that the Government should – as part of the NAMA proposal – pay for the banks’ so-called bad loans/assets on a phased basis, in order to minimise risks to taxpayers.