Finance ministers in the Euro Zone will choose Luis de Guindos, the Spanish Economy Minister, to succeed Vitor Constancio, the European Central Bank Vice President in May, a move that is likely to increase the chances of a German becoming the head of the ECB in 2019.
Originally faced with two candidates – de Guindos and Philip Lane, the Irish central bank governor – the ministers had their choice made easier for them because of the decision of Ireland to withdraw the name of Lane.
In a statement, Paschal Donohoe, the Irish Finance Minister, stated: “I believe that it is crucial that the election of a new Vice-President for the ECB is based on consensus, and should not be a source for any disagreement.
“In that context, I have decided that, on balance, it would be in the interests of the Euro-area as a whole to withdraw Philip’s candidacy in advance of any vote,” he said, adding that de Guindos had an “excellent track record.”
After an informal hearing of both the candidates during the past week, the economic committee of the European Parliament, which only has a consultative role, said that Lane was a better option. However, officials of the eurozone said that de Guindos was the favourite.
The fourth-largest economy of the eurozone, Spain, has not had a representative on the executive board of the ECB since the term of Jose Manuel Gonzalez-Paramo ended in 2012.
The officials of the eurozone said that Ireland has never secured a post in the ECB. However, Lane is widely regarded as a top candidate to become the chief economist of the ECB when Peter Praet steps down from his position in 2019.
The selection of a southern European for vice president heightens the chances that a northerner such as Jens Weidmann, the German Bundesbank governor, could be elected to replace Mario Draghi as the head of the ECB next year.
One official of the eurozone stated: “It looks like that is the case. But it is a chess game, and we don’t know all the players yet. Lane would be well placed as chief economist, but Weidmann depends on the distribution of the big jobs in 2019.”
The “big jobs” include the chairman of European Union leaders, the head of the European Parliament, and the head of the European Commission — all of which will come up for replacement in the coming year.
Officials from the Eurozone said that Weidmann could get the top job in the ECB if, for instance, France secures the presidency of the European Commission, naming someone like Michel Barnier, the chief Brexit negotiator of the European Union, or Christine Lagarde, the head of the IMF.
Choosing the chief of the Bundesbank for the ECB presidency may be quite tricky; even though Weidmann is considered to be a top-notch central banker, he has alienated some officials with his opposition to the ultra-easy monetary policy of the ECB, which is credited with reviving the growth of the economy.
Some other governors of central bank regarded this as disloyalty during a time of crisis.
Weidmann has also angered some political feathers, publicly clashing with Matteo Renzi, the then-prime minister of Italy, over the failure of Rome to further reduce its debt.
After being on the losing side in the huge decisions of the ECB on economic stimulus, Weidmann might also have a hard time to unite the Governing Council, which aims for consensus decisions and seldom resorts to voting.