Throughout the crisis, I have been highly critical of the Central Bank's role in the creation of conditions that drove us toward the crisis. And of the weaknesses in the CB's attempts to address the mortgages crisis, as well as the lack of direct and open assessment of the crisis.
At the same time, the CB also deserves praise. With Prof. Honohan in the driving seat, the organisation implemented major changes in operations, strategy, regulatory and reporting areas. It is well on its way toward breaking free from the past.
The CB beefed up reporting and compliance, opened up databases, cleaned up data disclosure, beefed up research. It is also a much more open organisation when it comes to communications with the analysts and the media. In dealing with the banks, the CB took a more pro-active role than is normally required. This reflected the nature and the extent of the crisis in our banking sector, as well as growing realisation within the CB that extend-and-pretend approach to the crisis is not going to help resolve the issues.
These processes of change are still ongoing and are far from being completed. The last thing we need now is a crisis in the Central Bank. With many competent people who took CB through significant and positive changes in recent years leaving, it is imperative that Prof. Honohan is given a chance to rebuild the team and press on with changes. The questions to be asked of the CB should not be limited to 'What is going on?', but must extend to include 'What is next?' We cannot allow the CB to slide back into the swamp of complacency it was prior to the crisis.