Dan Boyle
Question:114 Mr. Boyle asked the Minister for Finance the reason the Government has decided not to proceed with seeking a position on the executive board of the European Central Bank. [5551/03]
Priority Questions. - European Central Bank.
The vacancy on the six member executive board of the European Central Bank to which the Deputy is referring arises from the expiry of the non-renewable term of office of Ms Sirkka Hamalainen on 31 May next.
On the last occasion that such a vacancy arose, in May of last year, Mr. Lucas Papademos of Greece replaced Mr. Christian Noyer of France, and while at the time I did not propose an Irish candidate for that position, I indicated that Ireland would put forward a candidate for the vacancy caused by the ending of Ms. Hamalainen's term.
Article 11.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank states: ". . . . members of the Executive Board shall be appointed from among persons of recognized standing and professional experience in monetary or banking matters. . . . ." It is clear from the appointments made to date that this treaty requirement in regard to both qualifications and standing is being interpreted strictly. Of the original six members and one replacement appointed to date, three have been central bank governors, three others held very senior positions in a central bank and the only person who did not hold a position in a central bank, Mr. Noyer, was formerly head of the French Finance Ministry.
Against that background, where the number of credible candidates any member state can put forward is very limited, where a number of highly qualified candidates are already in the field, and moreover, where the eight year term of office for all new members is so lengthy as to effectively rule out some qualified persons, I recently considered whether an Irish candidate of sufficient standing and closely relevant experience, who was willing to allow his or her name to go forward, might be found. Despite informal approaches being made to a number of people, no such candidate was found.
I am glad to hear the job specification for entry to the European Central Bank seems to have been tightened up in recent years. Is the Minister confident that if such a candidate was found an Irish nominee would be accepted? The reality is that there is a degree of semi-detachment between Ireland and the European Central Bank, to which the Minister has helped to contribute in recent years. This semi-detachment is unhelpful in terms of our economic well-being and development. If the Government wants to be at the heart of Europe the development of a European monetary policy to a single European currency is being affected by not having Irish people in the midst of the decision-making process.
What steps does the Minister intend to take in the near future to ensure Ireland is not compromised in terms of a system that already weights against us in terms of the type of economy we have, how we are structured, where we stand in the economic cycle and how decisions are being made in the European Central Bank that will affect us in the short-term without, seemingly, a proper influence from an Irish Government perspective?
With all due respect, I think the Deputy misunderstands how the European Central Bank operates. The European Central Bank has a six member executive board but decisions are made by the 15 members of the European Central Bank. There are 18 members in total of the European Central Bank. We have one representative, namely, the Governor of the Central Bank, Mr. John Hurley. The only previous person there was the previous Governor, Mr. Maurice O'Connell. The executive board comprises six people. They sit with the European Central Bank in conclave and make the decisions. In the six member executive board Ms Hamalainen, the Finnish representative, represents the constituency of some of the smaller member states. When her vacancy arises it is considered that this position should be filled by the smaller member states. Austria and Belgium have put forward candidates and I have decided to support the Austrian candidate, Ms Gertrude Tumpel-Gugerell. However, this matter must be dealt with by unanimity and much negotiations will take place before that decision is made.
We are not semi-detached from the operations of the European Central Bank. The European Central Bank meets every second Thursday of the month. The Governor is continually out there and he is part of the process that makes this particular decision, but the executive board is made up of six people.
When the membership of the EU is more than 15, there are proposals on the table which will allow for a rotation of positions regarding membership of the council of the European Central Bank. There will be the large member states in one constituency, smaller member states in the second constituency and smaller again in the third constituency. Under the proposals already on the table we are in the second constituency at present. When there are more than 15 member states of the EU we will be rotating our position, more or less on the lines of the proposals put forward to deal with the commissionerships and so will the larger member states. Therefore, we do not have a semi-detached position from the European Central Bank. The Deputy may have been slightly confused with another European institution in the earlier part of his question.
I know the difference between the EIB and the European Central Bank. I was just reminding the Minister of the differences in job specifications. The question the Minister did not answer is what role the Irish Government is playing within the European Central Bank to ensure the differences between the Irish economy and the general European economy are understood within the decision-making structures of the European Central Bank?
The Deputy has raised a very interesting topic. The Governor of the Central Bank is totally independent in the exercise of his functions and the members of the European Central Bank board, of which Governor Hurley is one, operate completely independently. There has been a debate from the initiation of the concept of the euro as to the role of Ministers for Finance in influencing what central bankers do. We had this debate in the House during the term of the last Government and it boiled down to what I would term loosely as, the German and French ways of dealing with the Central Bank. Perhaps I am summarising it too smartly, but the Irish Central Bank has always been independent, set interest rates and devalued the currency in whatever way was necessary. Germany's Bundesbank operated in more or less the same way. The French position is somewhat different.
Prior to the setting up of the euro there was a great debate about what role Ministers for Finance should have. There is an arrangement whereby euro group ministers meet and, while they do not influence the operations of the Central Bank, the President of the European Central Bank attends the meetings and takes on board what is said. The European Central Bank is totally independent of Ministers for Finance, who play exactly the same role as everyone else.