BERLIN (Reuters) – The shock resignation of outspoken policy hawk Sabine Lautenschlaeger from the European Central Bank’s Executive Board vacates a seat at the ECB’s top table just as Mario Draghi prepares to hand over the presidency to Christine Lagarde.
By convention Germany, France and Italy, the biggest euro zone economies, always have a seat on the six-member Executive Board that runs the central bank’s day-to-day operations, which means Berlin is likely to propose a new candidate.
Lautenschlaeger’s background was in banking supervision. By replacing her with an economist, Berlin could seek to exercise greater influence over ECB policy, which Bundesbank chief Jens Weidmann, an arch-critic of the ECB’s crisis-fighting monetary easing, has struggled to influence under Draghi.
Following are potential candidates to take Lautenschlaeger’s seat on the board.
A German academic and member of the prominent German Council of Economic Experts, she is an economist with knowledge of monetary policy but has no executive experience at a major institution. In July, she questioned the effectiveness of Draghi’s strategy, saying: “Although monetary policy is already very expansive, the ECB is preparing a further loosening … It is doubtful that it will succeed in bringing the inflation rate in the euro zone close to 2 percent. At the same time, the risks to financial stability rise further.” She declined to comment when asked about replacing Lautenschlaeger.
A respected economist and now deputy governor of the German central bank, she has also served as a member of the German Council of Economic Experts. Buch has kept a relatively low profile at the Bundesbank and made a point of steering clear of monetary policy issues, leaving the topic to Weidmann. But her experience working closely with him could allow them to give more voice to hawkish positions on the 25-member ECB Governing Council, which comprises the Executive Board and euro zone national central bank chiefs. She declined to comment when asked about replacing Lautenschlaeger.
President of the Berlin-based DIW economic research institute, Fratzscher is a high-profile economist, and a professor at Humboldt University. Fratzscher knows the ECB better than other potential candidates, having worked at the bank from 2001 to 2012, rising to department head for the last four years. With degrees from Oxford and Harvard universities, his outlook is international and less hawkish than other leading German economists. When the ECB in July all but pledged to ease policy further, Fratzscher said: “The economic slowdown in the euro area leaves the ECB no other choice than to implement a more expansive monetary policy.”
A former Goldman Sachs banker, Kukies has worked at the German Finance Ministry since April 2018 as state secretary for financial market policy and European policy. A lieutenant of Finance Minister Olaf Scholz, he would bring inside knowledge of economic thinking in Berlin, but could risk looking like a political appointment.
Another member of the German Council of Economic Experts, Wieland has defended the ECB’s stimulus programme before Germany’s top court. An economics professor at the Institute for Monetary and Financial Stability at Frankfurt’s Goethe University, he has served as a consultant to the ECB.
(Compiled by Paul Carrel and Rene Wagner; Editing by Catherine Evans)