Some would say that part of the answer would be to cap particularly retail interest rates charged by banks. Do you see that as part of the answer? This is a long-running debate here. Even though the ECB rate is quite low, when you look across Europe, the mortgage lending rates in Ireland are higher. The ECB has provided a legal opinion on the draft law, and it highlights, in line with the Central Bank of Ireland analysis, that a policy that caps the interest rate runs the risk of having an unintended effect, which is that it will deter entry. The Irish banking system is quite concentrated. Many people would like to see more banks enter to compete and, through competition, lower the rates. If you have a legal approach, where there is a legal regulation capping the interest rate, then the incentive for foreign lenders to come in is less. We have this long-running debate about the contribution of the quite high default risk in Ireland being built into those higher rates. I understand the intent: trying to make housing more affordable is a big issue. But personally, and in terms of the official advice of the ECB, we think capping interest rates is not the advisable way to go. You don’t even see a role for it, say, if you were to consider the housing situation to be an emergency scenario; that it would be a temporary measure given to the central bank? Well, again let me come back to the basics here.
When I was at the Central Bank of Ireland, and where I am now, we would still have the same concern, which is: where do you strike a balance between recognising that this is an important source of revenue versus whether it is guaranteed to be here into the future. For any incoming government, having a prudent approach to managing that would be important. You’re nine months into the job: what do you think the advantages are for Ireland of having the former Governor of the central bank here in such a key role at the ECB? What’s very interesting about the ECB is that our only focus is on the overall performance of the euro area. The euro area is a very important trade partner for Ireland. What is good for the wider euro area would typically be good for Ireland. What I can say more generally is that the ECB has staff from everywhere in the EU. It’s very interesting to have that diversity. We talked earlier on about savers versus debtors. That’s important because that differs across the euro area. Some countries have big manufacturing sectors. Other countries are more focused on tourism or technology. It differs so much that having staff — and, if you like, the Executive Board membership — that reflects the diversity of the euro area makes for a very interesting workplace and I think makes for better-quality policymaking. One of the things we’ve been very worried about here for quite some time is Brexit.