Competence and not nationality should determine the next ECB chief…

Nice interview of Mr Benoit Couvre of ECB.

He says competence alone should be the basis for next ECB chief:

This autumn, ECB President Mario Draghi will step down after eight years in office. So far the ECB has had a Dutchman, a Frenchman and an Italian at its helm, but so far no president from Germany. Can you understand why many Germans want the next President of the ECB to come from here?

I understand that, but it’s the wrong way of looking at things. The choice of ECB President should not be based on nationality, but on competence.

But we should not pretend to be so naïve as to think that political and national considerations do not play a role!

Yes, of course, I understand the political process. But the selection should be based on competence. And, if you ask me, I would also be happy to see a woman at the helm of the ECB. Ultimately, there are various criteria – and it is a political decision.

So, what must an ECB President have in terms of qualities, abilities and knowledge?

You will have to ask the European Heads of State or Government; they decide that. What I would say as a central banker is that you have to be a good central bank manager, you must have a strong background in and knowledge of economics, and you must understand the capital markets – without being a hostage to market expectations – and you should uphold the independence of the ECB. And you need to have the ability to lead and to make compromises.

You have ambitions yourself. Some say you have a 10 percent chance of becoming ECB President. However, you are on the Executive Board, and it is crystal clear in the EU Treaty that a re-appointment of Executive Board members is prohibited.

I won’t give any legal interpretations. That is up to the EU Heads of State or Government. I have worked for Europe for the last seven years. I also want to continue to serve Europe. The central bank is a place where I can be useful. But, of course, I can also be useful elsewhere.

The ECB leadership has apparently already obtained legal advice which played out the case of you briefly stepping down and then being “re-”appointed as President. Would that not be a blatant ploy? A breach of the spirit of the rules?

I am not a lawyer.

But you would like to do it?

Who wouldn’t? But it is not a position that you apply for. We must respectfully wait to see what the politicians decide.

The next President of the ECB will have no easy task. He …

He or she …

Hmm.. Though most would argue that competence has barely been the basis so far. Why should it be different this time?

Has ECB policy led to rise of radical right in Germany?

A few years ago, Wolfgang Schäuble, as Finance Minister, once complained that the ECB’s low interest rate policy was 50% responsible for the rise of the Alternative for Germany (AfD) party in Germany. Perhaps he wasn’t being entirely serious but the fact is that many citizens are frustrated about the low interest rates which, for example, make retirement provision more difficult. Has the ECB played a part in the success of populist parties?

When the ECB is given the blame for political outcomes, that says more about politics than it does about the ECB. We clearly have a political framework in Europe that has not delivered what the people expect; not the growth, the employment nor the income that people in many countries want. The ECB is an easy scapegoat. Our tower here in Frankfurt is highly visible; many eyes are on us. Yes, we must take into consideration the side effects of our policy, the effects on savers, on house prices, etc. We take that very seriously. But the bottom line is that our low interest rate policy has benefited savers more than it has harmed them, since savers are also workers and borrowers. And in the housing market the low interest rate has also helped encourage more construction. The criticism is often too simplistic.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: