In 1969 Ken Whitaker was appointed governor of the Central Bank at a critical time in the bank’s development. On his appointment he gave notice that the bank would be “the warning light” and that it might also have “unpalatable things” to say in the future.

Under his governorship the bank was transformed into a dynamic and effective institution, which he guided through many economic and financial upheavals at home and abroad, including two global oil crises in the 1970s.

He set out to preserve the autonomy of the Central Bank vis-a-vis the government and the commercial banking sector. In this he was guided by the provision of the Central Bank Act 1942, which states: “That what pertains to the control of credit, the constant and predominant aim should be the welfare of the people as a whole.”

National interest

His words to the minister that “as a good Catholic I recognise the supreme authority of the Pope, but like a good bishop I claim jurisdiction within my own diocese”, was followed by his ultimatum that if the minister persisted, Whitaker would have no option but to resign. This ensured that credit policy remained under Central Bank control.

Later against the background of runaway inflation, balance of payments difficulties, galloping current and capital expenditure and irrational pay awards, he enforced strict credit constraints over the commercial banks, restricting lending to productive purposes.

He imposed penalties on excessive lending by the banks to the overheating building sector, as well as stemming the tide of external capital inflows.

Forceful advice

Years later, he was appalled and perplexed by the failure of a later generation of central bankers to flash warning lights during the Celtic Tiger years.

His choice of words in 2015 to new governor Patrick Honohan – “I’m counting on you to save the country from national humiliation” – expressed the depth of his disappointment at the bank’s perceived failure to discharge its obligations to safeguard “the welfare of the people as a whole”.