The purpose of this Bill is to make three minor amendments in the Central Bank Act, 1942.
Section 1 will empower the Central Bank to acquire securities of the International Bank for Reconstruction and Development—usually known as the World Bank—which was established in 1944 and of which Ireland became a member in 1957. Countries which are members of the World Bank are expected to assist it to raise capital by investing in the securities it issues at market rates on the international capital markets. The proceeds of these issues go to finance the World Bank's activities which are mainly concerned with productive projects in the less-developed countries. Section 7 (1) (h) of the 1942 Act already empowers the Central Bank, for the purposes of or through its General Fund, to buy, hold or sell securities issued by or guaranteed by any Government. The members of the World Bank are Governments but because its securities are not directly guaranteed by member Governments they are not covered by Section 7 (1) (h) of the Act. It is, therefore, proposed to amend this section and to do this in general terms so that the Central Bank will have power, if it so desires, to acquire securities which may be issued by any other international bank or financial institution formed by Governments.
Section 2 of the Bill will replace the provisions in Sections 19 (4) (a) and 23 (6) of the 1942 Act which disqualify the Governor and Directors of the Central Bank from nomination or election to the Dáil or Seanad or as Uachtarán. The Constitution provides that every citizen who has reached his 35th year of age is eligible for election to the office of President; it does not provide that disqualification in this respect may be imposed by law. The provisions in the 1942 Act that the Governor and Directors of the Central Bank are ineligible for election to the office of Uachtarán could, therefore, be regarded as unconstitutional, and the Bill will repeal them.
The 1942 Act also disqualifies the Governor or a Director, while he holds office, from being nominated or elected and from sitting or receiving payment as a member of Dáil Éireann or Seanad Éireann. On the principle that the legislature should have first claim on a person's services, these sections are being replaced by provisions that the Governor or a Director of the Central Bank who is nominated, with his consent, as a candidate for election to either House of the Oireachtas, or is nominated as a member of Seanad Éireann, shall thereupon cease to be Governor or Director of the Bank, and that any person who is for the time being entitled to sit in either House of the Oireachtas shall, while so entitled, be disqualified from being or becoming Governor or Director of the Bank. The existing provisions are being repealed in Sections 3 (ii) and (iii) of the Bill.
Finally, Section 3 (i) of the Bill will remove the bar on the payment of interest on deposits made with the Central Bank by Ministers of State, public authorities and the commercial banks under Section 7 (1) (b) of the 1942 Act. This will make it feasible for these institutions to keep their liquid assets with the Central Bank rather than in London. Up to now, such assets were kept mainly in London because the Central Bank was not in a position to offer the inducement of an interest payment such as these assets could earn in London. It is clearly desirable that the Central Bank should be in a position to attract the liquid reserves of these institutions and thus strengthen its own capacity to discharge its functions as lender of last resort. I recommend this Bill to the House.