Wanted: Crises-ready innovator for top ECB job

BERLIN, April 1 (Reuters Breakingviews) - European Central Bank President Christine Lagarde may or may not resign before the end of her eight-year term, opens new tab on October 31, 2027. But the race to succeed her as the bloc’s chief ratesetter has nonetheless started. The euro zone economy’s prospects already looked challenging in February, when reports, opens new tab of a possible early exit first surfaced. Since then, U.S.-Israeli bombings of Iran have given a new dimension to global economic risk. Lagarde’s replacement ​will need both strong economic credentials and political finesse, and must be ready to innovate in the face of the multi-fold crises threatening Europe. The difficulty of finding such a rare bird should prompt euro zone leaders ‌to consider a list broader than the two current frontrunners.

Those favourites have already emerged. If you believe economists, the former head of the Dutch central bank Klaas Knot is most likely to get the job if Lagarde leaves early, based on a Bloomberg survey, opens new tab. The 58-year-old has been on hiatus since leaving his position in July 2025. He ticks the traditional boxes for ECB hopefuls. Knot sounded like a classic hawkish central banker when he took over De Nederlandsche Bank in 2011, but he approved of the new tools devised by then-President Mario Draghi to take the euro zone out of its existential crisis, including massive bond-buying ​programmes.

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His would-be rival is former Banco de España Governor Pablo Hernández de Cos. The 55-year-old now serves as general manager of the Bank for International Settlements, known as the “bank for central banks”. Like Knot, he comes with impeccable technocratic credentials. ​Yet hailing from the once-embattled south of the euro zone, he will be seen as a dovish candidate more likely to push the ECB to play a proactive role in fending off potential ⁠recessions.

In normal times, the process would consist of a contest limited to these two candidates. They’d keep campaigning in front of their constituency of 21 — the euro zone leaders. Knot would intensify his charm offensive in the southern countries to convince them that his ​conversion to monetary pragmatism is real. De Cos would do the opposite and try to convince fiscal hardliners from the north that he is not as dovish as his passport would suggest. Draghi, an Italian, 15 years ago hired a German public relations consultant to convince ​Berlin that his nationality should not disqualify him for the top job. He prevailed in the end.

But these are not normal times. One certainty about the next ECB president’s term is their mandate will not all be smooth sailing. The consequences of the Donald Trump hurricane on the global economy will be felt for years, even after the U.S. president has left his job. In the short term, central bankers will have to deal with the Iran-induced energy shock. Within Europe, parties from the radical right are on the rise and one of them could come to power as soon as next year ​in France. Europe’s second largest economy also happens to be stuck in a fiscal crisis that will worsen if political chaos sets in.

The euro is nowhere near the type of existential crisis that began in 2010. But Lagarde’s successor may have to consider deploying two ​emergency bond-buying programmes designed in previous crises, neither of which has yet been used — namely, the Transmission Protection Instrument and Outright Monetary Transactions. And if the euro zone economy slumps, the new ECB chief will have to make a decision on whether and how fast to continue the ‌gradual “quantitative tightening” programme. The ⁠current plan involves shrinking the bank’s balance sheet slowly, by letting bonds purchased in past crises mature without being reinvested. The ECB’s balance sheet stood at 4.7 trillion euros when Lagarde took over at the end of 2019, having already doubled since its 2014 level. It stood at 6.3 trillion euros at the end of last year, after having ballooned to 8.6 trillion euros at the end of 2021 on measures to fend off a pandemic-induced recession.

It’s rather easy to devise the profile of an ideal central banker for troubled times. Armed with a strong economics background, they would have served a few years in academia and public service. They would be battle-hardened, having demonstrated sang-froid and an innovative spirit in a previous crisis, and would have a track record of resisting political pressure. Finally, the ideal ​candidate would have a strong personality with firm economic convictions, allowing ​them to lead the 27-strong governing council instead of acting ⁠as a compromise-seeker.

Nationality should be irrelevant. But that’s a faint hope. In reality, the next ECB head will not be French, because two of the four presidents since the euro’s creation already have been — Lagarde and Jean-Claude Trichet. And Berlin will again fail to get the job because German Ursula von der Leyen is president of the European Commission and Claudia Buch heads the ECB’s banking supervision body. ​The situation implies inter-country horse-trading, and not just for the appointment of Lagarde’s successor. She is one of four members of the ECB’s six-strong executive board whose terms expire before the ​end of next year.

Governments should widen the ⁠pool. They cannot unfortunately choose a foreigner, like the UK did, opens new tab at the Bank of England with Mark Carney in 2012. The euro’s founding treaty demands that the job be held by a citizen from a euro zone member country.

Another idea, which would prove controversial, would be to look at experienced private-sector candidates. Jean Lemierre, chair of BNP Paribas (BNPP.PA), opens new tab, would tick many boxes, but his French nationality makes his appointment unlikely. A politician with a record would also fit the bill — think of Nadia Calviño, the former Spanish finance minister now presiding over the European Investment Bank. ⁠And even if ​it would go against their tradition, euro zone leaders shouldn’t shy away from appointing an academic to the job. Belgium’s Frank Smets, the current head of economic ​analysis at the BIS, would among others be a credible contender.

That could be too much to ask. Euro zone leaders may instead choose the safety of technocratic and political tradition, which would mean appointing another central banker like Knot or de Cos. The worst however would be to agree on the consensual candidate least likely ​to ruffle feathers. Considering what lies ahead, the ECB needs a strong leader, not a perpetual compromise seeker.

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Editing by Liam Proud; Production by Streisand Neto

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Pierre Briancon

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Pierre Briancon is a Breakingviews columnist, writing on European business and economics. He was previously a writer or editor at Barron’s, Politico, and Breakingviews for a first stint as Paris correspondent and European editor. For the first part of his career he was a foreign correspondent and editor at Libération, the French newspaper. He was also an economics columnist for Le Monde and for French public radio.

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