June 11, 2019 / 11:39 AM / 2 months ago

Breakingviews - Irish central banker job glitch may be a blessing

New Zealand's Finance Minister Gabriel Makhlouf attend the first ministerial meeting of APEC finance ministers at the APEC Summit in Honolulu, Hawaii, November 10, 2011. REUTERS/Jason Reed

LONDON (Reuters Breakingviews) - Things can sometimes go right even when they go wrong. The New Zealand Treasury official picked last month to be Ireland’s next central bank boss is facing an investigation Down Under about how he handled early accessing of sensitive budget information. If Gabriel Makhlouf’s appointment goes awry, the Irish finance ministry’s delight at recruiting overseas talent will look premature. But it would give Dublin a second chance to pick an ideal homegrown candidate.

The ruckus began after New Zealand’s opposition National Party on May 28 published what it said were key budget details before the scheduled release. Makhlouf said on the same day his department had been hacked. But two days later the Treasury said police believed a feature of its website’s search function appeared to have been used and that this did not appear to be illegal.

The opposition National Party has predictably called for Makhlouf’s resignation. More serious is the decision by New Zealand’s State Services Commissioner to launch an investigation into his actions and public statements. Though Makhlouf believes he acted in good faith, some Irish politicians are calling for the appointment to be put on hold until the findings are public. They argue that Ireland’s top central banker must be above reproach. All the more so since the independent institution, like other official bodies, had to win back public trust after the financial crisis that took a heavy toll on the country’s economy.

If Makhlouf’s appointment is derailed, Ireland needn’t look far for the perfect candidate to replace Philip Lane, who has joined the European Central Bank as chief economist. Though she was inexplicably passed over the first time, Deputy Governor Sharon Donnery is ideal. It’s true that her forte is more macroprudential policies than macroeconomics. But Lane built up a strong economics research team before he left. And given interest rates are set in Frankfurt, Donnery’s qualifications are well suited for an institution that is responsible for other, more nuanced levers to manage domestic borrowing and the financial sector.

Installing the eminently qualified Donnery would also make Ireland the only euro zone country with a female central bank chief. Given the ECB’s struggle to come up with serious female contenders to replace outgoing President Mario Draghi, that might stand her in good stead when the job next falls vacant in eight years’ time. An embarrassing hiring glitch might even prove a blessing.

Breakingviews

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