Speaking at the launch of the Central Bank’s 2013 annual report, Mr Honohan said an effective study was required and should be broad in its scope of topics and dates, rather than being narrowed to “a small period of time” surrounding the introduction of the bank guarantee scheme.
He said it could, however, run the risk of failure if it runs for a long time and focuses on minutiae that interests nobody. He also noted that an inquiry was unlikely to reveal anything new about the causes of the financial crisis.
His comments were made prior to the Government moving for an immediate establishment of an inquiry, later in the day.
The Central Bank generated a record profit of €1.5bn last year, with a surplus income of €1.2bn set to be paid to the Exchequer. Its annual report also noted that the number of regulatory actions taken by the Bank jumped from 841 to 1,004 last year.
While noting “significant progress” made in the recovery of the Irish economy, Mr Honohan said the process still required “resolute actions from various participants” and said it was “absolutely crucial” that the Government kept to its path of fiscal consolidation, something which has been “intensified” by the bail-out exit.
“There is no room for any doubt on this score to arise. Financial markets are right to assume that a disciplined fiscal approach will be maintained. It would be folly to allow any other supposition to gather credence,” he said.
When asked — at yesterday’s report publication — about the Anglo Irish Bank trial and, specifically, Judge Martin Nolan’s criticism of ex-financial regulator, Patrick Neary, Mr Honohan said such failures wouldn’t happen under the Central Bank’s current management.
Deputy governor Cyril Roux added that “sweeping changes” had been made by both Mr Honohan and former regulator, Matthew Elderfield, and that the trial’s criticisms applied “to a regulator of the past” and do not reflect what’s going on in the Central Bank today. Mr Honohan refused to be drawn, however, on questions regarding the potential ‘claw-back’ of former banking officials’ pension payments and/or Mr Neary’s severance pay.
Also noting updated eurozone inflation figures, Mr Honohan said continually low inflation posed as big a threat as deflation.
On mortgage solution updates, he said the Central Bank was not planning on pushing new measures on the banks, adding that the overall process remained “broadly on track”.
Regarding banking competition, meanwhile, he said having a wider variety of banks in the market — including foreign-owned entities — remains “very important”.
He added that the likes of Ulster Bank and PTSB remained important andsignificant players in the market.