Irish central bank is said to discuss row involving new governor after furore
August 04 2019 12:34 AM
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Gabriel Makhlouf
Gabriel Makhlouf, New Zealand’s former treasury secretary, poses for a photograph after a Bloomberg Television interview in Singapore (file).

Bloomberg/Dublin

Ireland’s central bank commission discussed how to contain any potential fallout from the controversy which engulfed its incoming governor, a person familiar with the matter said.
In June, Gabriel Makhlouf, New Zealand’s top Treasury official at the time, escaped dismissal with a rebuke from authorities for failing to take responsibility for a security breach around sensitive budget information. He was appointed as Ireland’s central bank governor in May, and takes up the role next month.
The commission in Dublin, which oversees the institution’s management, discussed whether the furore could leave Makhlouf vulnerable and on the back foot if future controversies in Ireland were to erupt, according to the person, who asked not be identified because the conversations were private. In June, the opposition Labour Party called for the appointment to be suspended as the row in New Zealand raged.
The discussions by the commission centred on how best to aid Makhlouf in his new role rather than featuring any effort to derail his appointment, the person said. Though some members have more concerns than others, as a group they see a planned statement by Makhlouf on the affair when he takes up the role as key to drawing a line under it, strengthening his position and ensuring the central bank remains unharmed, the person said.
Makhlouf is the country’s first non-Irish governor, and his appointment continued a trend of hiring foreigners with international experience for central banks in recent years. One recent example is Mark Carney, a Canadian by birth, who is nearing the end of his term as Bank of England governor.
Members of the Dublin commission see the need for a strong, independent governor as especially important, as potential conflicts loom over issues such as mortgage rules, the person said. Irish Prime Minister Leo Varadkar said last month that he’d like to see some central-bank rules limiting mortgages relaxed, to help people buy homes. ECB officials contacted the Irish government with concerns over Makhlouf’s appointment, the Irish Times reported this week without saying where it got the information.
The newspaper said the qualms included that Makhlouf is not an economist, the controversy he was involved in, and the fact he is a UK passport holder as Brexit nears.
A spokesman for the ECB said the institution isn’t involved in the appointment procedures of national governors. The finance ministry said it received no objection from the ECB.
Makhlouf “was selected as the new governor following a competitive, international process and was deemed to be the most suitable candidate for the role. The appointment is made under national legislation,” the ministry said. “Furthermore, it is his intention to obtain an EU passport, to which he is entitled, following his arrival in Ireland later this year.”
The central bank commission consists of the governor and two deputy governors, the head of the finance ministry, and six members appointed by the finance ministry.
A spokesperson for the central bank said that while the governor’s appointment is a matter for the government, it would be expected that the commission would be involved in the preparation for a new chief. Commission members met the incoming governor when he visited the bank recently as part of a series of meetings he held there in advance of his new role, the spokesperson said.



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