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Explainer: With Draghi's job eyed, ECB prepares for grand reshuffle

FRANKFURT (Reuters) - Euro zone leaders will have to pick a new president to lead the European Central Bank in the coming months, reshaping the 19-country currency bloc’s most powerful institution.

FILE PHOTO: European Central Bank (ECB) President Mario Draghi delivers a speech during a ceremony to mark the 20th anniversary of the launch of the Euro, at the European Parliament in Strasbourg, France, January 15, 2019. REUTERS/Vincent Kessler/File Photo

The selection will cap a year of change that will see half of the ECB’s board and more than a third of its Governing Council replaced, an unprecedented reshuffle in the euro’s 20-year history.


The Holy Grail is of course the presidency, with Mario Draghi’s term ending on Oct 31. The mandates of the ECB’s chief economist Peter Praet (May 31) and board member Benoit Coeure (Dec. 31) also expire. In addition, Austria, Belgium, Cyprus, Estonia, Ireland, Latvia, Slovakia and Slovenia are all due to get new central bank chiefs this year.


Central Bank of Ireland Governor Philip Lane’s nomination as chief economist is virtually a done deal. The other two board positions are up in the air.

For president, Francois Villeroy de Galhau (France), Jens Weidmann (Germany), Olli Rehn and Erkki Liikanen (both Finland) are in the race. Coeure (France) is also mentioned in the press as a contender, but as a sitting board member, he is not eligible for reappointment. Some have suggested that if he resigned before a nomination, he could gain eligibility, but such a move would be unprecedented and contrary to the spirit of the law.


Appointments to the six-member ECB board are political, though key roles are usually filled by leading economists.

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The next ECB president and the new heads of the European Commission and the European Council are all likely to be negotiated as part of a package after elections to the European Parliament in late May.

Draghi was appointed four months before he formally took over in 2011. The timeline will be tighter this year but the process should end by the time Europe shuts for summer holidays.


** ECB presidents are usually picked from among the 19 national bank governors who sit on the Governing Council along with the six board members, and should be top-flight economists.

** As the three biggest countries, Germany, France and Italy generally claim board seats, the 16 other members usually share the remaining three spots. Italy could be off the board for more than a year, however, as Draghi is unlikely to be replaced by an Italian. Since the next seat to fall vacant is held by France, it’s possible that Italy will have to wait until Yves Mersch’s term expires on Dec. 14, 2020 to reclaim a board position.

** A nation should not have more than one board seat. So if, for example, Weidmann is appointed ECB president, the other German on the board, Sabine Lautenschlaeger, will be expected to resign.

** The Netherlands, France and Italy have all had ECB presidents in the past and some argue that they should not get the job again until others have had the chance.

** The European Parliament has often complained about the dearth of women in top ECB jobs. Currently, only two of the 25 members of the Governing Council are women and one is due to leave this year.


The Germans certainly think so. But Bundesbank President Weidmann has antagonized many. He openly opposed the ECB’s stimulus program, credited with reviving growth, and got into a public fight with Italy’s prime minister over fiscal discipline. Hints from Berlin also suggest that Germany will seek the EU Commission presidency rather than fight an uphill battle for Weidmann.

Reporting by Balazs Koranyi