Philip Lane named as new Central Bank Governor

|| October 21, 2015

The new Governor to the Central Bank was appointed on October 20th. Professor Philip Lane of TCD was announced by the Minister for Finance as his recommend nominee, a decision ratified by Cabinet. He will assume the position from Professor Patrick Honohan, who leaves the bank in the coming weeks after a successful six years at the helm of the bank.

Professor Lane continues the trend initiated by the selection of his predecessor-he will be the second consecutive Governor sourced from the private sector. He is appointment also followed an open selection process, the first time this approach has ever been employed by the Bank.

Academia

Lane, the Whately chair of political Economy at TCD, has been the head of economics at Trinity for the past twelve years. He holds a PhD in economics from Harvard and has also lectured in Columbia. He is a vastly published and experienced academic economist, both domestically and internationally. Some of his more senior roles include his chairmanship of the advisory scientific committee of the European Systemic Risk Board and his position as an ex-officio member of the general board and steering committee of the ESRB, whose functions overlap with those of the European Central Bank governing council. Professor Lane has acted as a consultant for the ECB, the IMF, the World Bank, the European Commission, the Organisation for Economic Cooperation and Development, the Asian Development Bank as well as a number of national central banks.

Outsider

His appointment comes as somewhat of a surprise to many both internally within the Central bank and Government as well as from the private sector, as it was widely believed that the current secretary general of the Department of Public Expenditure, Robert Watt, was the favourite candidate in what had effectively become a two horse race. Most media and industry commentators have welcomed the appointment of an outsider, with the Governorship of both Professor Honohan and Lane highlighting that the trend of recruiting externally may become a permanent feature in the Bank. This is in stark contrast to past generations when every Governor appointment went to a top civil servant.

Background

Professor Lane, 46, lacks a broad public profile on a personal level, reports only stating that he is a serious-minded individual. He was born in Blackrock, Co Dublin and attenfed school privately in Blackrock College. He graduated from Trinity with a first-class honours degree in Economics in 1991 as the top-ranked student in his class. He is highly regarded internationally among economists and set up the website irisheconomy.ie to promote the online discussion of the economic issues facing Ireland.  

Challenges

Professor Lane has the appropriate experience internationally to carry out the crucial European dimension to the governorship. He will sit on the decision-making governing council of the European Central Bank, which sets euro zone interest rates and oversees interventions in financial markets. The ECB’s campaign to shore up the single currency and its involvement and actions in the Irish State bailout have proved widely contentious and a strong, competent Irish presence on the council is vital to protect the State’s interests. Domestically, another huge challenge facing the new appointee is the handling of the recently introduced Central Bank mortgage rules in relation to LTI and LTV caps; Professor Lane will face substantial pressure from the legislature to amend these rules in order to open up the market to first time buyers. It is understood that Professor Honohan was resolute in his belief that the mortgage caps should become a permanent feature in Irish mortgage policy, but there have been a series of reports released indicating that the regulations are having negative and unintended effects on the market. Other issues which require urgent action include mortgage arrears and the regulation of the insurance sector. It is clear that Professor Lane has a huge challenge on his hands, with both the domestic and international financial regulators and authorities following his progress with interest.

 

Laura Mannion

Fennell Public Affairs

October 2016