The former governors of the Spanish and Dutch central banks, Klaas Knot and Pablo Hernandez de Cos, are seen as the top candidates to replace Christine Lagarde as the head of the European Central Bank (ECB). Lagarde plans to leave her position before her term ends, allowing outgoing French President Emmanuel Macron to influence the selection of her successor, especially before upcoming elections that could be won by eurosceptic parties.
Economists suggest that Lagarde’s early departure may lead to a political agreement to fill all three ECB Executive Board vacancies that will occur next year: Lagarde’s position, chief economist Philip Lane’s seat in May 2027, and Isabel Schnabel’s at the end of 2027. Knot and de Cos are viewed as experienced and credible central bankers who could shield the ECB from political pressures, which has been a concern given recent political events in the U. S. related to the Federal Reserve. It is believed that the decisions regarding these appointments will be interconnected due to their timing and the small pool of candidates.
Both Knot and de Cos have experience on the ECB’s rate-setting Governing Council. Knot, originally a policy hawk who disagreed with the ECB’s previous easy-money policies, has softened his stance towards the end of his tenure. De Cos, considered a dove, adapted his views on inflation recently. Knot may have an advantage if Lagarde’s position opens soon, as he is noted for his credibility and pragmatic approach. Conversely, de Cos could be seen as too dovish, favoring lower interest rates which benefit more indebted southern European countries.
Germany’s Bundesbank head, Joachim Nagel, and existing ECB board member Isabel Schnabel have also expressed interest in the role. However, Schnabel might face challenges in continuing on the Executive Board due to term limits. Germany has never had the ECB presidency despite being Europe’s largest economy.
Analysts agree that all candidates are capable and would maintain the ECB’s independence, which is crucial in the current political landscape where central bank independence is under threat in both the U. S. and potentially the U. K. It is noted that France’s central bank governor, Francois Villeroy de Galhau, recently resigned, giving Macron the opportunity to appoint a successor before the upcoming presidential election.
There are also warnings that euro zone governments could nominate unexpected candidates, as was the case with Lagarde. Appointments are typically part of larger political negotiations, which could change with an early departure from Lagarde’s post, leading to new possibilities in the selection process. Overall, it appears too early to make definitive predictions about the next ECB president amid potential political maneuvers.
With information from Reuters
