Analysis - Women challenge central banking men's club

FRANKFURT (Reuters) - When the European Parliament turned Yves Mersch down for a top central banking post, it wasn’t because he lacked the expertise or experience; they rejected him because he is a man.

Bottom row (L-R): National Bank of Belgium Governor Guy Quaden, Central Bank and Financial Services Authority of Ireland Governor Patrick Honohan, Bank of Portugal Governor Victor Manuel Ribeiro Constancio, Bank of Italy Governor Mario Draghi, President of the European Central Bank (ECB) Jean Claude Trichet, Member of the Executive Board of the ECB Gertrude Tumpel-Gugerell, European Commissioner for Economic and Monetary Affairs Joaquin Almunia, Vice-President of the ECB Lucas Papademos, from middle row (L-R): Bank of the Netherlands economic counsellor Lex Hoogduin, Bank of Slovenia Governor Ivan Sramko, Austrian Governor Aide Wolfgang Duchatczek, Austrian National Bank Governor Ewald Nowotny, Deutsche Bundesbank President Axel Weber, Bank of Slovenia Governor Marko Kranjec, Bank of France Governor Christian Noyer, Central Bank of Luxembourg Yves Mersch, (back row from L):Bank of Finland Governor Erkki Liikanen, Member of the Executive Board of the ECB Lorenzo Bini Smaghi, Central Bank of Cyprus Governor Athanosios Orphanides, Bank of Spain Governor Miguel Fernandez Ordonez, Member of the Executive Board of the ECB Jose' Manuel Gonzalez-Paramo and Member of the Executive Board of the ECB Jurgen Stark pose for a family photo during the governing Council meeting of the ECB in Venice in this October 8, 2009 file photo. To match Analysis ECB-WOMEN/ REUTERS/Stefano Rellandini/Files

Mersch, a Luxembourger who is highly regarded by his peers, had been expected to get the job on the European Central Bank’s all-male board anyway. Last month’s parliamentary vote was non-binding on EU governments, which have the final say, although Spain raised last-minute objections on Monday.

The vacancy highlighted an uncomfortable fact: not one of the 23 monetary policymakers making vital decisions for the euro zone is a woman. Other central banks are also dominated by men.

Those who sympathise with the ECB say the pool of women qualified as policymakers is small and warn against making “token” female appointments while Europe is in crisis.

But critics say the ECB and other male-dominated central banks need to look harder for strong female candidates, and stop relying on policy committees of dark-suited “clones”. The U.S. Federal Reserve, by contrast, has strong female representation.

At the European Parliament, deputies complained that not enough effort had been made to find suitable women candidates for the post on the ECB’s six-member Executive Board. One lawmaker said the ECB, which regularly lectures governments on the need for change, should take a closer look at itself.

“The ECB is asking all our societies to modernise. Fine. They are asking for structural reforms. Fine. They are asking for more women at work. Fine. And when it comes to themselves, they do not modernise, they do not include women,” said Sylvie Goulard, a French liberal.

The ECB has had female policymakers as recently as last year when Austrian Gertrude Tumpel-Gugerell completed her term on the board. But currently all the board members are male, as are the national central bank chiefs from the 17 euro zone states who join them on the Governing Council for policy decisions. The next vacancy on the board is not due until 2018.

It is not alone. Generally, few women have made it onto the boards of top central banks and often their responsibilities are relatively minor. Their representation is still lower than in the private sector.

Of the world’s central bank heads, just 12 or about six percent are women, according to this year’s Central Bank Directory. Most are in emerging markets, such as South Africa’s Gill Marcus and Mercedes Marco del Pont of Argentina.

One way to tackle the imbalance would be a quota system, similar to stalled plans for the private sector proposed by EU Justice Commissioner Viviane Reding, who wants companies to allot 40 percent of their board seats to women by 2020.

In central banking, appointments are usually made by national governments. Those not necessarily based on qualifications may be risky considering the responsibility that comes with such jobs - making decisions that affect not one company but one country, or an entire currency union.

Few doubt Mersch’s qualifications. He has sat on the Governing Council since 1998 as Luxembourg’s central bank chief. A hardliner on curbing inflation, he holds postgraduate degrees in international public law and political science, and spent the early years of his career in public sector finance institutions.


Rebecca Harding was the only woman in a group of economists, former central bankers and journalists to sign a letter to the Financial Times urging the European Parliament to withdraw its objections to Mersch.

Harding, who is chief executive at Delta Economics, opposes quotas, which she said would undermine women who have already reached senior positions on merit.

“The pool of women of the right age, experience and track record at the moment is relatively small and it is too important at the moment to appoint on the grounds of tokenism compared to grounds of merit,” she said.

DeAnne Julius, a former member of the Bank of England’s Monetary Policy Committee, disputes such suggestions. She believes that where there’s a will, there’s a way. “There are plenty of qualified women who have the ability and the appetite to take on those roles, but you have to look harder for them,” said Julius, who was an external member of the MPC.

She suggested getting external recruitment companies involved and broadening the search to include commercial banking, corporations and civil services, which might require structural changes in some central banks.

Julius worked in the private sector as chief economist at British Airways and Shell before joining the MPC when it was created in 1997. Of the women to have served on the MPC, Rachel Lomax was the only one who rose up within the UK central bank.

“The evidence is, if you are going to have committee decisions there will be better decisions if they are made by a committee that has a broad range of perspectives and not a committee of clones,” Julius said.


International Monetary Fund chief Christine Lagarde has made a similar point about the wider banking system. She has said that the financial crisis, which began in 2008 with the collapse of a U.S. investment bank, might have taken a different turn had “Lehman Brothers been a bit more Lehman Sisters”.

However, striking a balance between external expertise and understanding the internal workings of a central bank is vital.

“You should be quite well acquainted with the practical work of a central bank, otherwise it is very difficult if you come from the outside,” said one former female central banker, who asked not to be named.

However, she held out hope for the euro zone and beyond. There were already many high-level female professionals in central banks, she said, pointing to Denmark, Austria, China and South America.

“They are not yet necessarily in a position where they could be promoted faster than their male colleagues, but they are coming, I’m sure they are coming,” she said.

The world’s most powerful central bank, the U.S. Fed, seems to be making greater progress. Three of the Fed’s seven-strong Board of Governors are female. Three more women also sit on the Federal Open Market Committee, although not all are voting on the policy-making body this year due to a rotating system.

A prominent example for women who have made it in the world of central banking is Janet Yellen, the Fed’s vice chairwoman who has been mentioned by the New York Times as a possible candidate to succeed Chairman Ben Bernanke.


Economics, often a training ground for central bankers, has been male dominated for years but with more women studying the subject to a higher degree level this could change.

The share of female economics professors in the United States almost doubled between 1997 to 2011 to 12.8 percent, according to an American Economics Association.

In Britain, the proportion of female economics professors almost doubled between 1996 and 2010 to 26.3 percent, a survey by the Royal Economic Society Women’s Committee showed. There is a similar trend in Germany, where about 12 percent of economics professors were women in 2010 compared with 6 percent in 2000, data from the statistics office showed.

Jacob Kirkegaard, Research Fellow at the Peterson Institute for International Economics, said women still face hurdles. “Let’s face it, central banking, certainly in Europe, is probably among the most conservative, reactionary institutions you can think of,” he said.

Nevertheless, Europe has some strong contenders such as Belen Romana Garcia, a former head of the Spanish Treasury and as such also on the board of the Bank of Spain. She was a firm favourite earlier this year to head Europe’s permanent rescue fund, but lost out to Klaus Regling.

Soledad Nuñez, former Director General of the Spanish Treasury, joined the ECB in July as a board member of its new settlement platform Target2Securities, having earlier been tipped to become deputy governor of the Bank of Spain.

In France, Anne Le Lorier has become the first female deputy governor of the Bank of France while Danièle Nouy, general secretary of the bank’s prudential supervisory authority, used to chair the forerunner to the European Banking Authority (EBA).

Her name could come up when discussing candidates for the new post as the European banking supervision chief.

In Germany Sabine Lautenschlaeger, vice president at the Bundesbank in charge of banking and financial supervision and a former head of Germany’s banking watchdog, would also be well positioned to take on such a role.

Sharon Bowles, a Briton who chairs the European Parliament’s economic affairs committee and a driving force behind the Mersch rejection, has even applied to succeed Bank of England governor Mervyn King when he retires next year.

Following Mersch, the next battle is already in sight. Bowles made clear last week that the parliament wanted to see a women heading the new European banking watchdog - preferably an ECB outsider. “The parliament will be looking for gender balance throughout, not just by having a token chair,” she said.

Additional reporting by Julien Toyer; editing by David Stamp