Senior figures at the Central Bank are annoyed by the Government's announcement of plans to appropriate the €240 million profit on the issue of euro notes, pre-empting the Bank's own decision on the matter.
A Central Bank spokesman confirmed yesterday that the decision on what to do with the windfall is one for the Bank's board alone to make.
"The board of the Central Bank has said it will consider the issue after the completion of the euro changeover on February 9th," he said.
It is understood that senior figures at the Bank see the Minister's announcement of his plans in Wednesday's Budget speech as showing disregard for the independence of the Bank.
However, the Bank's spokesman declined to comment on this yesterday. It is normal for the Bank to transfer surpluses to the Exchequer, but it is a decision for the Board, not the Minister.
The Bank's board could theoretically decide to refuse the Minister's request for the funds, or to accede in part to it.
However, it is thought highly unlikely that it would take such a confrontational step, despite the annoyance at the presumptuousness of Mr McCreevy's announcement.
The Bank's board is appointed by the Minister for Finance, with a number of its current members having been appointed by Mr McCreevy's predecessor, the Labour Party leader, Mr Ruair∅ Quinn.
The transfer of the profits arising from the sale of notes by the Central Bank to commercial financial institutions is the first of two actions the Minister plans to take Central Bank funds into the Exchequer. The second, the taking of the proceeds of the issue of coins, will require legislation and the Bank has no objection to this. This measure will bring some €370 million to the Exchequer in 2002, with some €35 million accruing in each subsequent year. There was no information available yesterday from the Department of Finance on when the legislation on this would be published.
Meanwhile, a spokeswoman for the Department of Social Welfare confirmed last night that the Social Welfare Bill, to be published today, will contain a section authorising the controversial transfer of €635 million to the Exchequer from the Social Insurance Fund next year. The Bill is expected to pass into law by Christmas.
The Taoiseach yesterday rejected criticisms of the mechanisms used by the Minister for Finance to bring once-off extra revenue of over €200 billion to the Exchequer.
"The Minister has very properly marshalled available resources to avoid a plunge into borrowing at this stage," he said.
He added that there was nothing out of the ordinary in the proposal to transfer the windfall profit from the issue of notes to the Exchequer.
"The position since 1942, when the Bank was set up, is that the Minister for Finance is entitled to have a portion of the surplus transferred to the Exchequer.
Every Government has availed of that surplus and that is what we propose to do."
The taking of money from the Social Insurance Fund was merely the taking back of contributions the Exchequer had made in previous years, he said.