Donohoe commits to ‘comprehensive’ search for Lane successor

Minister for Finance Paschal Donohoe has committed to carrying out a "comprehensive" search for the successor to Central Bank governor Philip Lane, who is poised to become Ireland's first representative on the European Central Bank's (ECB) executive board.

Prof Lane is alone among the Central Bank's 11 governors since the institution's 1943 establishment in having been appointed through an open competition, in late 2015. His predecessor, Patrick Honohan, also an academic, was the first head of the Central Bank to be selected from outside the upper echelons of the civil service.

"A comprehensive process will be launched in the event that the governor is appointed to the ECB," a spokesman for the Department of Finance said in response to questions from The Irish Times. The appointment, according to law, is officially made by the President on foot of a Government nomination.

Prof Lane emerged on Wednesday as the unopposed candidate to succeed outgoing ECB chief economist Peter Praet on the six-member board in Frankfurt, sparking a round of speculation on who will succeed the former Trinity College Dublin professor at the Central Bank of Ireland.

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Missed out

Deputy Central Bank governor Sharon Donnery, who missed out in a competition late last year to find the next head of the ECB's banking supervision arm, has been widely tipped to become the next governor, which would make her the first woman to hold the position.

Department of Finance general secretary Derek Moran and his counterpart in the Department of Public Expenditure and Reform, Robert Watt, who was shortlisted against Prof Lane in the 2015 competition, are also seen as likely contenders. All three declined to comment either personally or through representatives last week.

The European Council of government leaders is scheduled to ratify the appointment of Prof Lane (49) on March 21st, following his expected formal nomination by EU finance ministers on February 12th.

Nomination

The ECB governing council will also have to offer an opinion on the nomination of Prof Lane, who was given an important task by ECB president Mario Draghi, under his position as chair of the European Systemic Risk Board, in late 2016 develop a plan to keep euro zone states' borrowing costs low following the financial crisis – without triggering fiscal union.

Prof Lane's proposal for sovereign bond-backed securities, which would be issued against pools of euro zone government bonds, was subsequently taken up by the European Commission last May. However, it has met resistance from some member states, notably Germany, where the notion of joint borrowing by euro zone countries does not play well with voters.

Prof Lane told Reuters in December that “it will take time for the legislative discussions to evolve” around the proposal.