The country's banking system needs more competition in order to aid an almost creditless economic recovery after a crisis saw some lenders close and others leave the market, outgoing Central Bank Governor Patrick Honohan said today. 

"We could all do with more competition in the banking system and I am of course encouraging new investors to come into the system, in whatever way - through acquisition, new startup - and I am hoping that that will happen," Honohan said.

He made his comments in a speech at the Small Firms Association's annual lunch in the Convention Centre in Dublin today.

"Competition between banks has the potential to lower interest rates further," Professor Honohan added.

The Professor is due to retire from the Central Bank later this month and is being placed by Trinity Professor Philip Lane.