On the Philip Lane ECB announcement
LUKE MING FLANAGAN MEP ON THE PHILIP LANE ECB ANNOUNCEMENT
The announcement that the Eurogroup Finance Ministers has given its backing to the candidacy of Philip Lane to become chief economist of the European Central Bank (ECB), and thus also become Ireland’s first member of the European Central Bank's executive board, should come as no surprise.
The ECB executive board is responsible for implementation of euro area monetary policy as laid down by the ECB governing council, and since his appointment as Governor of the Central Bank of Ireland in November 2015, Mr Lane has been extra-diligent in ensuring that Ireland plays its part in the full implantation of that policy, regardless of the cost to the country in general.
By February 2013 the €31billion Anglo/INBS Promissory Notes debt had become a major embarrassment to the then Fine Gael/Labour coalition government, the annual destruction of €3.1billion to meet the ECB targets creating an increasing clamour of discontent. To ease the pressure on the government, then Finance Minister Michael Noonan pulled what was applauded as a master-stroke, refinanced the remaining €25billion of Prom Note debt and set up a new and far more gradual schedule of destruction.
That schedule was to see the destruction of a ‘mere’ €500million per year for five years from 2014 to 2019, a considerable drop from €3.1billion per year for the same period. For the next five years then, 2019 to 2024, it would increase to €1billion per year, and so on, until the entire €31billion had been taken back out of circulation – destroyed.
Since Mr Lane’s appointment to the Central Bank of Ireland, however, he has accelerated that schedule, massively so, and at huge cost to Irish society.
In 2014, before his appointment, the Central Bank destroyed €0.5billion; in 2015, however, that figure jumped to €2.0billion, then increased again in 2016, to €3.0billion, yet again in 2017 when Mr Lane’s Central Bank destroyed €4.0billion, then another €3.5billion last year. That’s €12.5billion destroyed in the last four years as opposed to the total of €2billion which had been in the schedule, every cent borrowed from the markets by our National Treasury Management Agency, on every cent of which we are now paying interest, and every cent of which will have to be repaid when the new bonds matured.
Whatever people’s opinion on the Prom Note debt, in light of the many, many crises we have faced during those four years those billions could have been put to much more practical use.
This government has never challenged the ECB on the legitimacy and/or the legality of that debt. Mr Lane, as Governor of the Central Bank and as a member of the Governing Council of the ECB, could have taken up the case for Ireland. Instead he opted to take up the case of the ECB, which has always wanted the destruction of the billions accelerated.
Which brings us back to that appointment. Given all the above, is anyone now surprised?