Money and Banking in the Irish Free State, 1921–1939

Abstract

Abstract The years following the creation of an independent Irish Free State were a formative period for the Irish banking system. The Bank of Ireland adapted slowly but effectively to the new situation, but it needed the prospect of the Second World War for the Bank to switch its full loyalty to the country, and for the commercial banks to acknowledge that an Irish central bank might have a useful role to play. It was generally accepted that the Irish banks’ links with London, and the commitment to maintain parity with the sterling, ruled out an independent monetary policy. This argument was reinforced by the virtual absence of a domestic money or capital market, and only the first tentative steps in the development of such markets were made during the inter‐war period.