ECB President Succession Battle Begins Early German Hawk Executive Director Schnabel expressed his willingness to succeed Lagarde

The Zhitong Finance App learned that ECB Executive Committee member Isabelle Schnabel said that when Christine Lagarde's term ends in less than two years, she is willing to take over as ECB president if someone invites her. When asked if she thought a German should lead the ECB and whether she herself might be that candidate, Schnabel said in an interview: “If someone invites me, I'll be ready.”

Currently, popular candidates for this position are considered to include former Bank of the Netherlands Governor Claus Nott, Spaniard Pablo Hernandez Decos, the current president of the Bank for International Settlements, and Joachim Nagel, Governor of the Bundesbank. Although Lagarde's term will last until October 2027, discussions about her successor are intensifying as the political community looks for a replacement for Vice President Louis de Guindos, who will leave office in May next year.

These senior-level changes are part of a large-scale restructuring where two-thirds of the six-member executive committee will be replaced. The core goal of this delicate and complex process is to maintain the dynamic balance between large and small countries, countries in the North and South, and between hawks and dovish forces. It would be ideal if the balance at the gender level could be further balanced. Schnabel and Lagarde are the only two women on the ECB Governing Council, and all member countries' central bank governors are currently men, and all candidates for the position of vice president are men.

Since the establishment of the ECB in 1998, Germany has always held a seat on the executive board, but has never held the position of governor; France has held this position twice; Italy and the Netherlands have each held this position. Although the Germans currently head the supervisory boards of the European Commission and the European Central Bank, some analysts still believe that if Germany really makes up its mind, it still has a chance to seek the position of governor; so far, German Federal Chancellor Friedrich Mertz has avoided talking about this.

Russ Hendrik Rolle, a former adviser to Angela Merkel and currently the European Commission's chief competition economist, said in an interview in October that now is the time for Germany to lead the ECB, but he also acknowledged “it's complicated.”

Schnabel's term on the executive board will expire two months after Lagarde's term ends, and is not renewable according to regulations; this obstacle may be solved through a legal loophole they discovered in 2018. A more difficult obstacle to overcome, however, may be her tough monetary policy stance, which will not necessarily be welcomed by all Eurozone members; since Austria's outspoken Robert Holzman left office in August, she is regarded as the most hawkish voice on the Governing Council.

Even so, in a 2024 survey, economists believed 54-year-old Schnabel — a former member of the German government's Independent Economic Advisory Committee — was even more important than Lagarde in terms of interest rate remarks.

Another obvious German candidate is Nagel, thanks in large part to his efforts to define a more broadly appealing centrist policy position; he hinted in an interview last month that he could imagine succeeding Lagarde. However, his path was also tortuous, as he had a close relationship with the Social Democratic Party, not Mertz's political party.

When asked about potential candidates, Rolle said in October that former finance minister Jörg Kukis “a good candidate,” but he wasn't the only one.

Whoever becomes the next ECB president is likely to face pressure from politicians to provide more support to the Eurozone economy, which may include adjustments to the agency's price-stabilizing mission.

French President Emmanuel Macron called for a re-examination of the ECB's monetary policy approach last weekend to promote the development of the single market; in an interview, he said, “Reiterating the value of the European internal market means we must not make controlling inflation our only goal; we must also focus on growth and employment.”