Search for ECB’s next vice president begins

Bloomberg

When euro-area finance ministers launch the process to find a new European Central Bank vice president, they won’t be flooded with nominations. So far, only Spain has said it will put forward a candidate to replace Portugal’s Vitor Constancio, whose term expires at the end of May, with Finance Minister Luis de Guindos the most likely nominee.
The meeting in Brussels kicks off a two-year process to replace two-thirds of the ECB’s top officials that involves striking a balance between nationalities, gender and competency. A southern European choice such as Spain’s Guindos for the vice presidency would bolster the case for someone from the north of the continent to succeed President Mario Draghi. Germany, the region’s largest economy, has never held the post and Bundesbank head Jens Weidmann is widely seen as a potential successor to Draghi.
Ireland, the only founding member of the euro that never had a seat in the ECB’s Executive Board, will probably hold off this time and look to put forward a contender for a future opportunity, according to people familiar with the government’s thinking.
The Irish aren’t alone in holding out. With four other top ECB jobs becoming vacant before the end of next year — including a new head of banking supervision — governments are already bolstering the credentials of potential candidates. The latest such move came when French President Emmanuel Macron made Sylvie Goulard one of two deputy governors of the Bank of France, placing an ally and a veteran of the European Union in the realm of the bloc’s top monetary policy makers.
Monday’s meeting will be chaired by another Southern European in a key role, Portugal’s Mario Centeno, who will make his debut leading the gatherings of the currency bloc’s finance ministers, the Eurogroup. After asking for nominations on Monday, finance chiefs will likely settle on one or more candidates in February.
The nominees must then undergo a hearing and a non-binding vote at the European Parliament, before EU leaders confirm the appointment. The scrutiny of European lawmakers could prove problematic for the 57-year-old Guindos.
They want a shortlist of at least three names that includes women — a request that should be taken seriously after the appointment of Luxembourg’s Yves Mersch was stalled for months in 2012 over a lack of female contenders. The gender issue will once again play a key role in the jostle for ECB jobs in the coming months and countries that can field women candidates with a strong profile are likely to have an advantage.
While Irish deputy central bank governor Sharon Donnery and Italian former ECB official Lucrezia Reichlin will be potential contenders, France has an advantage in this respect: Besides Goulard, it can field two widely known figures, International Monetary Fund Managing Director Christine Lagarde and London Business School professor Helene Rey. Another French academic, Natacha Valla, will soon move to Frankfurt to take up a place at the heart of the ECB’s policy making as deputy director general in the bank’s economics department.
POLITICAL APPOINTMENT
“We have been consulting with our own central bank and they would also be happy if a person like de Guindos would be working for the ECB,” Latvian Finance Minister Dana Reizniece-Ozola said in an interview on Monday. “I would also personally favor de Guindos at this point,” she said, adding that what Latvia expects from the next vice president is a person who will pursue “a conservative monetary policy.” The appointment of Guindos, a sitting finance minister, would also mark a break with the ECB’s technocratic tradition.
Yet he wouldn’t be the first politician to move straight into a central bank with Germany appointing deputy finance minister Joerg Asmussen in 2012. Former EU Commissioner and Finnish Economy Minister Olli Rehn was appointed in February to the board of the Bank of Finland, where he is widely expected to replace outgoing governor Erkki Liikanen later this year.