Professor Philip Lane:

This again goes back to the issue of the Central Bank and what one would expect a central bank to do in a multi-country monetary union. It is probably fair to say that the attitude of the euro system to Ireland had to be constrained by the issue of what this would mean for the behaviour of other countries in the system, whereas, if we had our own national central bank which only had our own national interests to think about, it would have been different. However, there are pros and cons to that. It must be remembered that because of the euro system, this was a massive net inflow to Ireland. If we just had our own national central bank, all we could do would be, essentially, to move funding from the Central Bank to the bank balance sheets. It would not be a way to draw net resources into Ireland. Because we are members of the euro system, however, there was a big net inflow into Ireland. As I tried to point out earlier, we were not the only beneficiaries of that, because the net inflow from the euro system allowed a net outflow of private investors, so that depositors and bondholders could escape. Who benefits from having lots of liquidity? Partly, there is a benefit here because we did not have to do the kinds of things that would have been necessary without that funding, but, partly, the benefit goes elsewhere.