6 November 2018
With less than a year to go until the end of Mario Draghi’s term as president of the European Central Bank (BCE), people are starting to wonder who his successor will be. In October 2019, the economist’s time at the head of the bank will come to an end – and it’s pretty safe to assume that the next person to take the hotseat will not be an Italian. Draghi, incidentally, cannot run again, having been in the post since 2011.
The body tasked with appointing the president of the ECB is the European Council, the EU’s assembly of heads of state and heads of government. In an ideal world, the ECB will look for the candidate with the best possible CV. However, it’s inevitable that politics will play a part in the decision. In many ways, the presidency of the ECB is considered one of the most important positions in the European institutions. For instance, Draghi is the man behind the economic policies that – according to many analysts – have influenced the economic performance of Europe since the crises of 2008 and 2011.
Draghi is responsible for the widely discussed Quantitative Easing, the policy whereby the ECB buys government bonds, which should come to an end by the start of next year. Perhaps due to the presence of Draghi, the ECB has been the main buyer of bonds from the Italian treasury. In other words, while everyone else was selling the bonds in the fear that they had become a risky investment, the ECB ramped up its purchasing in an attempt to maintain stability. These policies have made Draghi a very unpopular figure with some countries who would have preferred a less interventionist approach. That said, some experts believe that his guidance has been the key factor in seeing Europe through one of the worst crises of recent decades.
The German candidate
By the looks of things, a German or Frenchman could be appointed to the most sought-after job at the EU and handed the reins of Europe’s economic policies. One of the most talked-about candidates as the potential successor to Draghi is Jens Weidmann, the president of the Deutsche Bundesbank (German Central Bank) and a former economic advisor to Angela Merkel. In addition to being widely respected in the sector, Weidmann has the considerable advantage of being German. For no German has ever served as president of the ECB.
However, not everybody is convinced that the German candidate will be elected. If Draghi has anything to do with the decision, it’s unlikely that he will back such a controversial successor. Weidmann’s economic policies are very different to those of Draghi. For example, Weidmann has always been opposed to the drastic decrease of interest rates with which the ECB lends money, which was a measure firmly supported by Draghi as a means of pushing banks to inject money into the economy and stop the European recession. Weidmann was also the man who called for the end of quantitative easing. Another risk is that some would prefer to avoid a further increase in German influence at the ECB, which is based in Frankfurt and features a workforce made up of one-third Germans.
The French option
Weidmann is not the only named being discussed. Another candidate is François Villeroy de Galhau, the governor of the Bank of France. Villeroy de Galhau speaks perfect German and comes from the private banking sector, having previously served at the top of BNP Paribas. Yet he also has experience in public office as director of the French treasury. He has already shown his skill as a negotiator, proposing a reform of the Eurozone which satisfies French needs while accommodating German requirements. Yet Villeroy de Galhau is not the perfect candidate either. His problem? He’s French! The ECB has already had a French president in recent times (Jean-Claude Trichet, who left in 2011).
Other options include appointing an economist from a less prominent country such as Finland or Sweden, while Luis de Guindos, the current Spanish Minister of Economy, is another candidate.