A eurosceptic Irish government could cause ‘hypothetical headaches’ – Philip Lane

ECB chief economist says all parties ‘committed Europeans’

Philip Lane on the general election result: “I might have views about that as a citizen but it would not be practice to comment on individual countries.” Photograph: AFP

Philip Lane on the general election result: “I might have views about that as a citizen but it would not be practice to comment on individual countries.” Photograph: AFP

 

The European Central Bank could have been troubled if a eurosceptic Irish government had been elected last weekend, the organisation’s chief economist, Philip Lane said at an event on Thursday.

“There would be hypothetical headaches where a Government says we don’t believe in the euro and we don’t believe in the EU ... [but] all of the parties are committed Europeans.”

Speaking to members of Trinity College Dublin’s University Philosophical Society, Mr Lane noted that classic political issues, such as housing and health, were up for debate in the election but that there effectively appears to be political consensus on the foundations of the Republic’s economy.

“What is true of all the manifestos is that the bedrock of the Irish economic model is not under discussion.”

He was asked to comment on the election result but said: “I might have views about that as a citizen but it would not be practice to comment on individual countries.”

The former governor of the Central Bank of Ireland was speaking after being awarded a gold medal of honorary patronage from the student society.

His speech covered a range of topics such as inflation in the euro zone and Facebook’s cyrptocurrency libra.

Inflation

On inflation, Mr Lane noted that “millions more people would be unemployed” if the ECB didn’t act the way it did with its asset purchase programme known as quantitative easing (QE). He noted that the “people who study” QE “expect it to go on for a while but not too long”.

On the topic of cryptocurrencies such as bitcoin, he suggested that they “don’t have much future”. While he was more complimentary of Facebook’s libra, he said that if it’s scaled up, there’s a risk that some national currencies could be destabilised by it.

“It’s less of an issue for the euro or the dollar, but if you’re in some small country and there’s a shock, people may say ‘I might be safer holding libra’ rather than the national currency,” something he said could “worsen the dynamic”.

He also questioned whether national governments would, in the first place, even tolerate the replacement of central banks with private sector companies.