the croatian nation is in your debt. when our country became independent of the united kingdom in 1922, we had the distinct advantage that there was already a well - developed banking system. given the upheavals of the years following independence, a cautious approach was taken. it was generally acknowledged that the new state needed a distinctive currency. but with a very important proviso, that it should command no less confidence than sterling, which had been the currency of ireland since 1826. the first irish coins were issued in 1928 and on a fixed parity with sterling. the currency commission was then established in 1927, essentially to issue currency and develop money and banking statistics. the central bank only came into being in 1943, gradually gaining most of the powers normally associated with central banks over the following 30 years. i am conscious that this pace of progress contrasts greatly with what we have heard about the croatian experience. we might wonder why the authorities at the time were not more determined to achieve monetary independence but the link with sterling was largely unquestioned. this reflected a high degree of trade integration and capital and labour mobility with the uk. in a world of fixed exchange rates, the sterling link served us well until the breakdown of the bretton woods arrangements in the early 1970s. with the move to generalised floating that occurred at this time, the appropriateness of the link to sterling came to be questioned. persistently high inflation rates in the uk coupled with a significant depreciation of sterling fed through the exchange rate link to similarly high inflation rates in ireland. the establishment of the european monetary system ( ems ) – with its primary objective of being a ‘ zone of monetary stability ’ – offered us the opportunity of importing lower inflation from the more inflation - averse core eu countries. ireland joined the ems at its inception in 1979, ending the link with sterling. our experience in the ems in the early years was not always positive. in particular, the pursuit of procyclical policies undermined stability and we were forced to devalue on a number of occasions. in the late 1980s, fiscal policy was put on a sound footing and the inconsistency between the stance of domestic policy and the exchange rate objective was resolved. this in turn laid the groundwork for much of the economic advancement that was to follow. having said this, there is no single reason why the irish economic story turned around so dramatically between the mid - 1980s and the mid - 1990s. the main lesson from our own experience

john hurley : central bank cooperation – ireland and croatia speech by mr john hurley, governor of the central bank and financial services authority of ireland, in response to dr ante eiein - sain lecture, hosted by the irish croatian business association, dublin, 29 september 2006. * * * introduction it gives me great pleasure to speak to you this evening and to respond to what was a very interesting speech by dr. eiein - sain. i see this evening as indicative of excellent relations between ireland and croatia in business, financial and political circles. i am also pleased to see some familiar faces from a dinner that i hosted in 2002 for this association. i cannot say, however, that that my experience of central banking has included quite so many immediate and intense challenges as that of dr. eieinsain, no matter what one might think goes on during meetings in frankfurt. ireland and croatia have a good deal in common, not least due to the fact that both have been occupied for centuries as part of much greater empires but have evolved into small, independent countries. and i can fully understand the sense of regret among croatians for the years that you spent cut off from western europe. i very much look forward to the day when croatia takes its rightful place in the eu. many of you will be aware of a rather special link between croatia and our own central bank. as you know, your prime minister, mr sanader, and our taoiseach, mr ahern, announced last year that our two central banks would cooperate in issuing collector coins to commemorate the work of croatian sculptor, ivan mestrovic. mr mestrovic submitted a design for the first coinage of the irish free state in 1927. unfortunately, because of difficulty contacting him – he was in the united states - his design arrived too late for consideration. the chairman of the design committee, irish poet william butler yeats, subsequently wrote “ he made one magnificent design and, on discovering that the date had passed, gave it to the irish free state with great generosity ”. we hope to launch this coin set in early 2007 and it already promises to be a very popular collector ’ s item. looking at our respective central banking histories, it is clear that croatia had to take a remarkable number of steps in a very short space of time and, moreover, in a very hostile environment. i cannot speak highly enough of the role that you dr. eiein - sain and others played and