Lagarde Could leave ECB early, potentially eyeing European Commission role

According to the Financial Times, ECB president Christine Lagarde could leave her role ahead of schedule, allowing French President Emmanuel Macron and German Chancellor Friedrich Merz to play a key role in selecting her successor.

The reported aim is to prevent a potential future far-right French president from influencing the appointment of the leader of Europe’s most powerful financial institution. Nevertheless, MEP Carlo Fidanza, in an interview with UCapital, suggested that she might also be considering running for other roles, possibly within the European Commission.

Proponents of this approach argue it would safeguard the ECB’s independence and ensure that her successor remains firmly “pro-European.” However, there have been no official announcements from the European Central Bank regarding Lagarde’s plans.

Lagarde, known for her “consensus-builder” style, has led the ECB during a turbulent period marked by high inflation and complex monetary policy challenges. Her early departure could pave the way for a more traditional central banker, potentially shifting the bank’s ideological approach. Among the potential successors currently mentioned are Pablo Hernández de Cos of the Bank for International Settlements, Klaas Knot from the Netherlands, and Joachim Nagel of Germany’s Bundesbank. Despite the prominence of the role, analysts generally expect any market reaction to be muted.

The ECB differs from the US Federal Reserve in governance: unlike the Fed, where the Chair holds significant individual influence, the ECB operates largely through consensus among its Governing Council. This collective decision-making framework may help limit market volatility during the transition.

Observers note that Lagarde would be leaving at an opportune moment, with Eurozone inflation near target and interest rates stabilized, creating a “safe” window for a leadership transition without triggering significant disruptions in bond yields or the euro.

Benedetta Zimone