ECB criticises legal structure for Central Bank
The comments and proposals for changes to the heads of the Central Bank Reform Bill relate only to the new bank’s role in the European System of Central Banks responsible for the management of the euro.
A statement from Finance Minister Brian Lenihan welcomed the opinion and said the issues raised by the ECB have been addressed in the final text of the Bill published on March 30 or can, if necessary, be dealt with as the Bill progresses through the houses of the Oireachtas.
The opinion said the ECB was concerned about the independence of the new Central Bank and says it must not take or seek instructions from the Government as far as the ECB-related tasks and objectives are concerned.
The governor, the institution as a whole and the commission responsible for the bank, its management and price stability must be independent. There must be no interference with the bank’s obligation to support the general economic policies of the EU, it said.
It noted that the minister of finance’s influence over the bank’s supervisory role will be greatly increased and the operational independence of such supervisory role will be endangered as the commission appoints the head of central banking and head of financial regulation, with the consent of the minister. The minister also appoints up to six directors and the secretary general of the Department of Finance is also an ex-officio member.
The opinion also said this section of the legislation must be redrafted to ensure the bank’s independence is in line with international standards for the operational independence of financial supervisors.
The ECB said it would comment on the next two steps in what is a three-stage legislative programme creating a fully-integrated structure for financial regulation, consolidate existing law and enhance the powers of the Central Bank.
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