Vincent Browne: John Bruton was Taoiseach from 1994 to 1997. He was the leader of the opposition when the Maastricht was approved. During the debate on that Treaty, the focus was on abortion and structural funds. Hardly at all on the key issue, the single currency.

John Bruton: I think there probably wasn’t an adequate discussion of that at the time. We did get this 8 billion directly so that we could prepare for the single currency. The two were linked together. Albert Reynolds was successful in the Edinburgh Summit in getting 8 billion, and there was a suggestion that we might get a lesser sum. But that money was given to us in order that we could prepare our economy to be able to compete in a single currency.
I think people did appreciate that if you had a single currency you had to have some sort of central control on the printing of money. And to the extent that governments by running budget deficits print money, there had to be some sort of central control on that, and there were controls on that in the original Maastricht Treaty. Where I think we fell down was subsequently we didn’t implement those controls adequately, and equally we didn’t put similar controls in place to deal with the printing of money by the private banking system. And the provisions in the protocol to the Maastricht Treaty on that subject were never activated. Prudential supervision of Credit Institutions was from the very beginning part of the mandate of the European Central Bank, but it wasn’t activated and has only been activated comparatively recently in wake of the recent crisis.

Vincent Browne: One of the features of the Celtic Tiger era was the availability of cheap money, and this arose from our participation in the Euro, the Eurozone and the fact that there were low interest rates at the time which favoured Germany and not us. Wasn’t there a liability that putting in the balance sheets the plusses and minuses of involvement in the Euro, this was a significant liability?

John Bruton: Well I believe that if the original provisions in the Maastricht Treaty had been activated that issue would have been addressed. The protocol to the Maastricht Treaty covering the European Central Bank said that it had a responsibility in regard to the prudential supervision of credit. So that if interest rates were too low in any particular country, as they would have appeared to have been in Ireland, although there was nobody complaining about it at the time. There was the possibility of the European Central Bank to do something about that or to require the Irish Central Bank to do something about that. But unfortunately those provisions were never activated, even though they were there in black and white since 1992.

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