Professor Patrick Honohan:

Yes, because I do not want a monopoly banking system. If we decided as a nation that we wanted to work with just two or three banks that would be specialised and would jump on the instruction of some Government Departments, that is an entirely different way. Such systems have shown themselves to be very dysfunctional around the world, so I am certainly not going to encourage somebody to go in that direction.

The worst of all would be a halfway house in which we pretend that we are in one system and not in the other. One might say: "It cannot do much harm. You get reasonable people in the Central Bank. They can set a reasonable rate and that will be all right." First of all, however, that is not the way it will be perceived. Second, in committees such as this or in the political system in general, where will the advocacy for higher interest rates come from? It will not be there, so once one starts down this road it will be very difficult to convince anybody that they will ever be allowed to make a reasonable return on their investment.