Irish Central Bank is ‘not independent enough’, IMF warns

THE International Monetary Fund (IMF) has raised concerns that the Central Bank of Ireland is not independent enough.

The Washington-based fund said it had concerns that an official from the Department of Finance sits on the Central Bank Commission.

The Washington-based fund is also worried that the Minister for Finance holds the power to remove a commissioner for reasons other than incompetence posed a threat.

But it added that there were no indications of interference in any day-to-day operations.

In an assessment report, the IMF also said there were impediments to the bank attracting and retaining high calibre staff and said changes to its pay structure was needed to deal with the difficulty in recruiting and retaining appropriate skills.

The bank has lost a number of senior, high profile figures in recent years including former financial regulator Matthew Elderfield, chief economist Lars Frisell and director of credit institutions and insurance supervision Fiona Muldoon.

It also said officials in Dame Street should make more use of on-site inspections and pursue all of its available enforcement authority, including criminal prosecutions.

In a statement, the Central Bank said it had evaluated the IMF’s recommendations and will take appropriate action.

The statement added that the bank was “committed to ensuring that the regulatory framework and associated supervisory practices are assessed against best international standards”.

The IMF published assessment reports yesterday focusing on Ireland’s legislative and supervisory frameworks in relation to banking and markets regulation.

It said Ireland exhibits a high level of implementation of the so-called International Organisation for Securities Commissions principles.

It also said that accounting and auditing standards were high.

But the report also warned that the Central Bank lacks the power to appoint administrators to investments firms in the event of financial difficulties within the firm.

And it also said that Dame Street needed to structure its pay scales to accommodate the difficulty in recruiting and retaining appropriate skills and set for particular positions.