Madam, – Recent comments by former taoiseach, John Bruton, as echoed by Marian Harkin MEP (April 16th), that various articles of the Statue of the European System of Central Banks give rise to culpability on the part of the European Central Bank for the Irish banking crisis, are misleading.
The primary objective of the European System of Central Banks, as outlined by Article 2 of the statute, and as governed by the European Central Bank, is to preserve price stability in the euro system, and all other powers conferred on the European Central Bank are subject to this objective.
Mr Bruton and Ms Harkin, as well as many other commentators, seem to be of the view that the European Central Bank should have exercised its powers in relation to price stability to effect “prudential supervision” of the Irish banking system, regardless of whether or not such supervision was necessary to preserve price stability.
The idea that the European Central Bank should have attempted to exceed its legally defined remit, at a time when our national authorities, which are possessed of the necessary independence and statutory powers to effect such supervision, were assuring everyone that no such supervision was needed, is hardly tenable.
As Lorenzo Bini Smaghi points out in his controversial article in the Financial Times, taxpayers in euro zone states are faced with an important dilemma: if they insist on retaining the power to regulate their credit institutions, and they regulate them in a way that facilitates risk, in pursuit of reward, then the failure of regulation must rest with themselves.
In the affairs of nations, as in life, learning from your mistakes is an essential part of not repeating them. – Yours, etc,
Madam, – I would like offer my support to Dr David Honan’s letter (April 16th) proposing a new Five Point Plan in response to official European policy (which maintains that it is perfectly reasonable that Ireland should simply implement enough austerity until the Irish either adopt a German way of living or the island empties).
The German lifestyle of not owning any property, living on modest earnings, saving every spare penny and then fleeing the misery of the country for Spain to retire is not one which I wish to subscribe to.
If our politicians are too afraid to link the re-established Irish pound with sterling due to our complex past, I would suggest they link it to a “basket of international currencies” which happens to resemble sterling. – Yours, etc,