The Central Bank Governor has described the State take-up of Bank of Ireland shares as an 'untidiness' in the choreography of the restructuring of the balance sheets of the financial institutions.
He made his comments at the British Irish Parliamentary Assembly, being held in Cavan today.
Professor Honohan said NAMA was returning fair and honest valuations of the loan books of the banks under its aegis and in time they would definitely require more capital. Without recapitalisation NAMA would not work, he warned.
He said that NAMA would in time deliver the goods, but people should measure it in terms of what it could deliver.
Meanwhile, reducing wages is vital to ensuring Ireland's recovery and reversing the rise in unemployment, Professor Honohan told the gathering in Cavan today.
'Achieving lower nominal wage rates is not easy. But it is undoubtedly an essential component of a pro-employment recovery strategy for Ireland,' he said.
'This aspect of competitiveness deteriorated significantly in Ireland during the boom, and, given the fact that euro-area inflation will continue to be low in the years ahead, recovering wage competitiveness in the short run must depend largely on containing and indeed reducing nominal wage rates,' he added.
Professor Honohan compared the Irish situation with that of Britain, whose wage competitiveness he said had been helped by the weakness of sterling.
'The contrasting exchange rate regimes and policies have certainly complicated life,' the Central Bank Governor said.
He noted the collapse of the housing and credit booms has had a major impact on the public finances on both the Irish and Northern Irish economies.
'For Ireland, at least, the lesson has been that our taxation system needs to be on a firmer footing than in the past,' he said.
