WHEN European Central Bank (ECB) policy makers cast a secret ballot to select a new supervisory head, it was with their future leadership on their minds, according to euro-area officials familiar with the matter.
Governing Council members who voted last month for Italy’s Andrea Enria instead of the supposed frontrunner, Irish Deputy Governor Sharon Donnery, did so aware their choice could have repercussions for other senior appointments in 2019, the people said.
Donnery’s selection could have been an obstacle to her boss, Harvard-educated Governor Philip Lane, getting one of those seats and becoming chief economist, the people said, asking not to be identified because of the confidential nature of the selection process. An ECB spokesman declined to comment.
That’s the first of three of the ECB’s six Executive Board positions that are up for grabs next year. Governments will make those appointments and central bankers are concerned over how the horse-trading will play out, especially after European Parliament elections in May that could see populists gain sway.
None of the officials doubted Enria’s ability to lead the Single Supervisory Mechanism, but by thinking a few moves ahead — despite drawing criticism that they undermined their gender-diversity drive —policy makers acknowledged the risks of the upcoming reshuffle.
Governments have an incentive to appoint candidates based on nationality as much as expertise, and a small country like Ireland would typically struggle to get two senior posts in the horse-trading. The bank-supervision head isn’t on the board but has powerful sway over the region’s biggest lenders.
The chief economist proposes monetary policy, making it one of the most influential posts. It’s especially key because current holder Peter Praet is due to retire in May and his replacement should be selected before the European polls. President Mario Draghi leaves in October and Benoit Coeure, head of markets, at the end of the year.
Finance ministers’ choice this year of Luis de Guindos, formerly one of their own, as ECB vice president has already raised eyebrows at the Frankfurt-based institution because of the possible perception that its independence might be compromised by politics.
Guindos’s only challenger — before dropping out — was Lane, who has a doctorate in economics, a strong academic reputation, and central-banking experience. That battle was an omen for at least one of the officials of what the political appointment process could do to the ECB’s leadership. — Bloomberg