Paschal Donohoe was in a reflective and philosophical mood last Friday in Frankfurt what would prove his last visit to the European Central Bank (ECB) as Eurogroup president.
Ireland’s departing Minister for Finance told the sixth ECB Forum on Banking Supervision that the readiness of Europe’s banking sector to adapt to – and learn from – past crises was a welcome source of stability and resilience in an uncertain world.
Donohoe said he never approached such reforms as political theorist but as a finance minister who knew first-hand “the stark challenges in taking difficult decisions”.
[ What is the €410,000-a-year job at the World Bank that Donohoe is moving to?Opens in new window ]
Completing the return of Ireland’s banking sector to private ownership on his watch, he said, has been “a long and arduous road for the Government, and the Irish people, with many difficult decisions along the way”.
Looking to the future, in words that now have a valedictory ring, he urged EU governments to be “braver in taking decisions” to make progress on completing the banking union.
It was proposed in the euro crisis to obviate future bailouts through harmonised European banking rules and common oversight to spot problems early and weaken connections between private banks and the national governments.
The first two legs of the stool came about quickly: the single supervisory mechanism (SSM), overseeing European banks, and a bank- financed emergency fund, the single resolution mechanism (SRM).
Despite Donohoe’s best efforts, the third leg remains missing: a European deposit insurance scheme (EDIS), a no-no in many northern European member states who fear the political fallout and financial disaster of having to bail out southern European banks.
Waxing eloquent, Donohoe quoted Irish author Frank O’Connor’s favourite childhood adventure. Whenever they encountered a high walll, he said, “they would throw their hats over the wall, so they had no option but to find a way over”.
“We must throw our hats over that wall and commit to delivery,” he told the ECB gathering. “As political leaders and as key actors in the EU’s institutional framework, we have a responsibility to act without complacency.”
“It takes time to get over the wall,” said Donohoe, “but we will get over eventually.”
As Donohoe doffs his own hat and departs Europe for a senior role with the World Bank in Washington DC, he leaves it to Simon Harris and other EU finance ministers to contemplate who is the hat and who is the wall.
