Christine Lagarde heads ECB's 'dance of chairs' – The Economic Journal


With the end of Mario Draghi's eight-year term as president of the European Central Bank (ECB) in November, a chair dance will take place within the European institution responsible for setting monetary policy in the European Union.

After a stalemate, the European Parliament chose Christine Lagarde, the head of the International Monetary Fund, to replace Mario Draghi for a non-renewable eight-year term. The Frenchwoman said she felt honored, but within the Governing Council of the ECB, she has only one vote, out of a total of 21 votes cast among the twenty-five members of this Council.

In addition to Christine Lagarde, the ECB will have nine more changes, seven of which have already taken place, two of which have yet to take place. Austrian central bank governor Ewald Nowotly has a term of office, as has Benoît Coeuré, a member of the ECB executive committee (who was appointed as a potential successor to Mario Draghi), who is due to resign in August.

In 2018, the former governor of the Banco de Portugal, Vítor Constâncio, until then Mario Draghi's deputy, was replaced by the Spaniard Luís de Guindos, who remains in charge.

The Executive Board of the ECB shall consist of the President, the Vice-President and four other members appointed for an eight-year term which can not be renewed. The Executive Committee is at the heart of the ECB's decision, giving instructions to the central banks of the member states of the euro area – including the Banco de Portugal, headed by Carlos Costa – in the light of decisions taken by the Board of Governors of the ECB, when it meets, on the direction of European monetary policy.

Other functions of the ECB's Executive Committee are to prepare the meetings of the Board of Governors as well as to manage the central bank itself with the assistance of the German Michael Diemer. chief services officer of the ECB.

Currently, the six members of the executive committee are Mario Draghi (to be replaced by Christine Lagarde), Luis de Guindos (Spanish), Benôit Coeuré (French, who ends the mandate in August, missing a substitute)), Yves Mersch (Luxembourgish ), Sabine Lautenschlagen (German) and Philip Lane (Irish).

These six members of the Executive Board of the ECB form part of the 'first category' of the Governing Council of the ECB, since each is entitled to one vote on the Governing Council of the ECB.

Then there is a second wave of members within the Council of Governors, composed of five members who together have four votes. They are the German Jens Weidmannalemão, president of the Bundesbank, the German central bank. Following are the governors of the Spanish central bank, Pablo Hernandez de Cos, French François Vileroy de Galhau, Italian, Ignazio Visco, and Dutch, Klaas Knot.

There is also a group of 14 members of the Board of Governors, which is entitled to 11 votes, which is composed of the other governors of the central banks of the Member States. Among the new faces are Belgian central bank governors Pierre Wunsch of Estonia, Madis Muller of Ireland, Sharon Donnery of Cyprus, Constantinos Herodotou of Slovenia, Bostjan Vasle of Slovakia and Peter Kazimir of Slovakia.

Lagarde to hold Draghi inheritance at ECB



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