The ECB leadership is set for a major shake-up as the competition for the next president begins!
The European Central Bank is about to launch a large-scale overhaul of its senior leadership team, and this personnel change will ultimately determine who will succeed current President Christine Lagarde.
On November 10, according to media reports, by the end of 2027, four out of the six seats on the ECB's Executive Board will become vacant, and a behind-the-scenes battle for the highest monetary policy positions in the eurozone has already begun.
It is reported that Vice President Luis de Guindos' term will expire first in May next year, and the ECB will soon ask Brussels to launch a formal replacement procedure. The report, citing three sources, said that eurozone finance ministers will begin discussing the matter this week.
Afterwards, the terms of Lagarde, Chief Economist Philip Lane, and Isabel Schnabel will also end one after another in 2027, sparking fierce competition among eurozone countries for the region’s most powerful monetary policy roles, and the behind-the-scenes wrangling over the ECB President position has already started.
Analysts point out that the nationality and monetary policy stance of the vice president will have a significant impact on the selection of Lagarde’s successor, as this concerns the complex balance of power among what will soon be 21 member states of the eurozone.
Three Main Central Bank Presidents Emerge as Major Contenders
Regarding the vice president candidates, the report states that Finland has decided to nominate its central bank governor Olli Rehn for the vice president position; he is an economist and former EU commissioner.
Rehn is one of the more dovish voices on the ECB Governing Council, warning of the risk of inflation falling below the Bank’s 2% target. It is noteworthy that this appointment contest coincides with the term of Fed Chair Jay Powell also ending in May.
Additionally, the report cites a source revealing that the Croatian government is also preparing to nominate its central bank governor Boris Vujčić.
The behind-the-scenes wrangling over the ECB President position has already started.
According to reports, insiders reveal that former Dutch central bank governor Klaas Knot and German central bank governor Joachim Nagel are the two main contenders to succeed Lagarde.
Pablo Hernández de Cos, former governor of the Bank of Spain and current General Manager of the Bank for International Settlements, was described by a source as "meeting all the criteria" as the third candidate, and is a respected former academic economist.
Nagel has already begun lobbying Berlin to support his bid to become the next ECB President.
The report notes, according to sources, he has recently delivered a series of speeches and interviews, including in Greece, Spain, India, and the United States, on topics such as “adapting Europe to its new global role.” Germany, though the largest eurozone member, has never occupied the position of ECB President.
Lars-Hendrik Röller, the chief economic adviser to former German Chancellor Angela Merkel, recently stated, "I think it is time (for a German to lead the ECB), but it is complicated."
Like Germany, Spain has never held the ECB President position, and is currently the only major eurozone economy showing significant growth. After Guindos leaves, Spain will also have no representative on the Executive Board. Hernández de Cos has taught at Spanish business schools and at Carlos III University of Madrid, has both academic and institutional experience, and is known for being a pragmatic voice on the Governing Council.
However, ECB positions are often part of broader political deals among member states. A senior central banker remarked, "Unfortunately, qualifications are not necessarily the decisive factor."
Complex Power Balance Considerations
Allocation of ECB Executive Board seats is a highly complex task. Jens Eisenschmidt, Chief European Economist at Morgan Stanley and former senior ECB researcher, said:
"Achieving full representation of European member states on the ECB Executive Board is an extremely complex task."
Notably, there is an unwritten rule for Executive Board appointments: no country may occupy two seats simultaneously, and governments seek to maintain balance between hawkish and dovish stances.
Eastern European and Baltic countries that joined the eurozone after 2007 are demanding a voice on the Executive Board, with Latvia openly campaigning for a seat.
Gender balance is also among the considerations. Historically, the ECB Executive Board has been male-dominated. Since 1998, only 19% of 26 members have been women. A person close to the discussions stated, "France and the European Parliament will pay particular attention to gender issues."
It is reported that French central bank deputy governor Agnès Bénassy-Quéré, Greek central bank deputy governor Christina Papaconstantinou, OECD Chief Economist Laurence Boone, and London Business School Professor Hélène Rey are all seen by insiders as strong female contenders for Executive Board seats.
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