Professor Philip Lane:

We operate under our legislative powers. After the crisis across Europe there was a recognition that what is called a macro-prudential policy should have been interventionist in terms of the credit volumes and that the capital held by banks should be subject to intervention. We have that framework in Ireland. On the subject on which we have just had an exchange, it is not an issue about the Governor writing a speech or a report stating that the Central Bank of Ireland is concerned. One needs tools. We are using two instruments, first, a set of mortgage rules and second, a capital buffer so that if we think the credit market is starting to overheat, we can force the banks to hold more capital and therefore be able to absorb more losses. What we have right now is that we have brought in these mortgage rules, which I think are fairly severe in an European context but we are open to tightening them if we think it is needed. In regard to the capital buffer, it is still the case that credit is shrinking on net but if we get to a situation where we see credit surging we can intervene.

There are other tools available. We have many tools and we in the Central Bank of Ireland have a lot of autotomy to trigger them. It is definitely my responsibility and by the way, the reason that I took on this role is that I think it is fundamental. I would hope that somebody with my background in economics would be able to make the call when needed.