Economic Letter: Three Quarter-Centuries of Central Banking in Ireland

An Economic Letter from Patrick Honohan, former Governor of the Central Bank of Ireland, considers the 75-year history of the Central Bank. The Letter is based on remarks made at an event in Dublin in February 2018 marking the 75th anniversary.

The key findings are:

• The history of the Central Bank fits neatly in to three contrasting quarter-centuries: an era closely mirroring the British system post-Independence; an era of monetary instability; and an era of hyper-globalisation.
• National economic performance on price stability and average job growth in the most recent quarter-century outperforms the two earlier quarter-centuries, although the last 25 years have been more volatile and were accompanied by an over-financialisation which caused much damage.
• In the next quarter-century, the power of the big deposit banks may be eroded by: resolution policies, which ensure they are no longer too big to fail; technological innovations; and if there is a failure to establish a culture of service to their retail customers.

The views presented in Economic Letters are those of the author and do not necessarily represent the official views of the Central Bank of Ireland.

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