Global Daily – Building support for De Guindos for ECB

by: Nick Kounis

In this publication: ECB View: De Guindos holds the political cards

180215-Global-Daily.pdf (43 KB)

The race for the post of Vice President of the ECB – with the term of the current incumbent Vítor Constâncio ending on 31 May 2018 – is heating up. The two main candidates are the Spanish economy minister Luis de Guindos and the Irish central bank Governor Philip Lane. Yesterday both had informal hearings before the European Parliament’s Economic and Monetary Affairs Committee . The chairman of the committee suggested the Mr Lane made the stronger impression. However, the political backing among member states is likely to be the key factor in the appointment, and here Mr de Guindos seems to be holding all the cards. The Spanish government has hinted that they have strong support among other governments for their candidate. Indeed, according to El Mundo newspaper, French officials briefed it that the French Economy Minister Bruno Le Maire will vote in favour of Luis de Guindos at the Eurogroup meeting on 19 February. We think that Mr de Guindos (who we think has dovish views on monetary policy) will indeed get the post. Ironically, Mr Lane may be set for bigger things. The Bundesbank President Jens Weidmann appears to be the current frontrunner for the Presidency of the ECB (Mario Draghi’s term ends on 31 October 2019). Our sense that he is too hawkish to ultimately get the support of a broad range member states. This could open up the door for a more centrist candidate from a Northern European member state and Mr Lane does fit the bill in this case. Instead, a more hawkish Northern European (such as Ardo Hansson – the Governor of the Estonian central bank and also a candidate for the Presidency) could take the Chief Economist role (Peter Praet’s term ends on 31 May 2019). Such a scenario would see three doves at the top of the ECB being replaced by a dove, a hawk and a centrist by the end of next year. So the ECB would likely become less dovish. (Nick Kounis)