The government has appointed Philip Lane as the 11th Governor of the Central Bank of Ireland. Like the incumbent, Patrick Honohan, Lane is a Trinity College Dublin academic.

Governor Honohan will be stepping down around the end of November. As well as the CBI role, Lane will also become a member of the ECB Governing Council.

The late Brian Lenihan broke with tradition when selecting Honohan as CBI Governor, as until then the position had always gone to a civil servant. Now finance minister Michael Noonan has decided to tap TCD’s fount of wisdom as well.

Honohan clashed with the Department of Finance by imposing limits on mortgage borrowing, a move that Noonan’s officials opposed.

Selection Process

Commenting on the selection process, Michael Noonan explained: “Professor Lane was chosen as the government’s nomination to the position of Governor following an extensive national and international executive search process to identify suitably qualified candidates in Ireland and abroad.

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"This was undertaken due to the unique importance of the position of Governor of the Central Bank to the Irish financial system and the Irish economy. Over one hundred potential candidates were identified from around the world, with a wide-ranging and rigorous selection process resulting in the nomination of Professor Lane.

"This was the first time such an open selection process was used for the appointment of the Central Bank Governor and I would like to thank all of the applicants for putting their names forward for this role. I also appreciate the efforts of all involved in the search process, including the interview panel and their advisers, Merc."

Minister Noonan also paid tribute to Professor Honohan. “Professor Honohan took up the position of Governor of the Central Bank at a very difficult time for our country in 2009. He has played a key role in stabilising our economy and in our move back towards prosperity and has also overseen significant reform in the Central Bank during this period. As Minister for Finance, I have greatly valued his expertise and counsel."

Lane is Whately professor of political economy in TCD. He was appointed to the position in 1997. Professor Lane was also educated at TCD and did a PhD in economics at Harvard University.

In a Blog post written with Honohan in February 2009, Lane opined: "If the required fiscal adjustment is implemented, the future can be bright for the Irish economy. While the construction and property price bubble that sustained growth in the 2003-2007 period skewed the structure of the economy and its balance sheet in a damaging way, many of the factors that drove the original and extraordinary Irish Hare expansion during the late 1990s remain in place.

"In addition, while unemployment is growing, the current crisis has underlined the adaptable nature of the private-sector labour force, with employers and workers negotiating an impressive array of firm-level deals to maintain employment, including measures such as substantial nominal pay cuts, adjustments in working hours and sabbatical schemes.

"Accordingly, its attractiveness as a globalised economy with a highly-open labour market means that there is no reason why Ireland cannot emerge from this crisis as a mature, high-productivity contributor to the wider European economy."

For other Philip Lane economic insights, click here.

Pension Deficit

Lane will be entitled to an annual salary from the CBI of €254,048 per annum. In 2014, Patrick Honohan gifted €57,048 to the Minister for Finance from his 2014 emoluments, resulting in a net remuneration of €197,000 for 2014.

All Central Bank jobs offer staff a defined benefit pension.  The organisation’s pension scheme had an actuarial deficit of €286m at the end of 2014. Controversially, the CBI has sought to shore up its Rolls Royce pensions by hiking the levies extracted from financial intermediaries in the private sector.