Not just Draghi, but tenure of two more top officials of ECB gets over in 2019..

Prof Lucrezia Reichlin of London Business School writes on how change of guard will happen this year at ECB. It is not just Draghi whose term ends on 31-Oct-2019 but Peter Praet whose term ends on 31-May-19 and Benoit Coeuvre whose tenure ends on 31-Dec-19. These three have been key to ECB’s decision making during the European crisis. Under ECB rules, they cannot be reappointed.

Prof Reichlin says the appointments at the central bank are going to be crucial:

A colloquium in honor of Peter Praet, its departing chief economist. Having worked closely with ECB President Mario Draghi through the years after the 2008 financial crisis and subsequent euro crisis, Praet, more than anyone else, has been the one to steer the bank’s governing council toward a common decision in difficult situations. His departure comes after that of Vice President Vítor Constâncio last summer, and he will be followed out by Draghi in October and Benoit Coeuré of the ECB executive board in December.

These important changes in the ECB leadership offer a chance to reflect on the challenges the Bank will face in the coming years. As the eurozone’s only truly federal institution, the ECB has found itself acting as the “institution of last resort” during past crises, picking up the pieces when national governments fail to reach agreement. It has managed this despite its complex governance structure. The ECB governing council comprises 19 national central-bank governors, each representing countries with different interests, as well as the executive board, whose six members are appointed by the European Council following an intense bargaining process

Though Draghi tends to get most of the attention, he made sure to point out at the colloquium that it was Praet whose recommendations have consistently been accepted by the governing council these past eight years. The departing leadership’s success in building a consensus within such a diverse group should not be taken for granted.

The battle over central-bank independence will define the ECB’s next decade. As national governments reflect on Praet’s departure and look ahead to the selection of a new president and executive board, one hopes they will take seriously the task of picking the right women and men for the job.


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