A scent of institutional deviation is wafting through the European Central Bank, as President Christine Lagarde is reportedly planning to step down before the 2027 presidential elections in France. This move aims to allow Emmanuel Macron to play a pivotal role in selecting her successor, according to a report by the Financial Times. Lagarde’s term officially ends in October 2027; however, concerns are mounting that the far-right may prevail in the French presidential elections in the spring of that year—a development that could complicate the selection process for the leadership of Europe’s most important financial institution.
Citing a source with knowledge of the proceedings, the Financial Times reports that Lagarde has not yet decided the exact time of her departure, but she desires that Emmanuel Macron and German Chancellor Friedrich Merz play a defining role in choosing the person who will succeed her. It is noted that Macron is constitutionally barred from seeking a third presidential term. "President Lagarde is fully committed to her mission and has made no decision regarding the end of her term," an ECB spokesperson stated.
A flood of reports
The report comes just one week after the Governor of the Bank of France, Francois Villeroy de Galhau, announced his intention to resign this June, more than a year before his term expires. This allows Emmanuel Macron to appoint his replacement before the critical elections that the far-right might win. Although the choice of Lagarde's successor will be a decision made by the leaders of all 21 eurozone member states, current practice suggests that any successful candidacy must secure both French and German support. To date, there are no official candidates, but names are already circulating in ECB circles. Notable among them are the former head of the Dutch Central Bank, Klaas Knot, and the General Manager of the Bank for International Settlements, Pablo Hernandez de Cos.
Lagarde's non-renewable term at the ECB concludes on October 31, 2027. Before leading the Bank, she served as Managing Director of the International Monetary Fund from 2011 to 2019, and earlier served as France’s Finance Minister.
Silence from European officials
There is no fixed timetable for the appointment of ECB presidents. The agreement for Lagarde was part of a massive horse-trade for EU positions, finalized four months before her term began. A similar timeline applied to her predecessor, Mario Draghi. Officials in European capitals are keeping their cards close to their chests, insisting it is too early to open the issue. However, this has not stopped speculation among eurozone policymakers that governments might bypass the established practice of selecting ECB executives one by one to ensure a cleaner and faster result through a combined decision.
Beyond the presidency, two more seats will become vacant, including that of Chief Economist Philip Lane in May 2027. The need for consultation with the European Parliament and the desire not to have the process coincide with the election year in France could allow for a decision by December. Leaders might also agree on the succession for Executive Board member Isabel Schnabel, who is set to depart at the end of 2027. "I think this would clearly be Macron's preference," said Shahin Vallee, a senior research fellow at the German Council on Foreign Relations and former advisor to Macron at the Ministry of Economy. "It is not clear if other leaders will follow, but if Macron gets what he wants, he will make the appointment of Lane the occasion for a broader deal."
One advantage of a comprehensive agreement would be that management positions in half of the ECB's top hierarchy would be settled. Given France's likely pursuit of Lane's position—which could mean two seats on the Executive Board by the end of Lagarde's term—a "package" deal could reassure major countries like Germany and Spain that they can secure their own positions.
The favorites for succession
German central banker Joachim Nagel is a potential candidate to succeed Lagarde, although his Dutch rival, Klaas Knot, is currently considered the favorite according to a Bloomberg survey of economists. Also in the race is the head of the Bank for International Settlements, Pablo Hernandez de Cos, from Spain. Austria provides a recent example of accelerating appointments before a potential far-right victory. In March 2024, six months before the elections, the then center-right government opened applications for all seats on the central bank's board, long before some terms had expired. Economy Minister Martin Kocher secured the appointment as governor that August and took office 13 months later.
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