Central Banking

Spain and Ireland vying for the ECB's vice presidency

Luis de Guindos
Preparing to lecture southern states on their spending habits. Source: DPA

Many Spaniards assume their economy minister, Luís de Guindos, will become vice president of the European Central Bank this spring. Spanish media outlets are speculating over who will replace Mr. de Guindos in Madrid when he assumes his role as the ECB’s second-in-command in Frankfurt. The minister has said his country has all the support it needs – from 14 euro-zone members – to vote him into the post. That will be a welcome change as Spain is underrepresented in influential EU roles, despite ranking as the euro-zone’s fourth-largest economy.

Spanish government sources say they expect Mr. de Guindos can count on support from Germany. That’s because Berlin wants the presidency for itself and is looking to install Bundesbank head Jens Weidmann as ECB chief once Mario Draghi’s term expires in late 2019. Having Mr. de Guindos as his deputy would strike a power balance within the ECB between northern and southern members.

The bank’s current vice president, Portugal’s Vitor Constancio, is due to leave his post in May, after an eight-year term. Whether or not Mr. de Guindos replaces him, the Spaniard has a solid track record, having helped pull his country out of a deep recession and revitalized its banking sector. The 58-year-old also has experience in the private sector, as head of the Lehman Brothers’ subsidiary in Spain and Portugal before the bank’s collapse in 2008.

Only one woman serves on the ECB’s executive board.

Eurozone finance ministers are due to vote on the appointment on February 19. While Mr. de Guindos is likely to win conservative support, he is facing stiff resistance from the Greens and other left-leaning parties, including from within the European Parliament. Members there have long taken issue with the lack of women in the ECB’s top ranks. Only one woman, Sabine Lautenschläger, serves on the central bank’s executive board, and only two members of the 25-person governing council are women. In Spain, the opposition Socialists had called on the government of conservative Prime Minister Mariano Rajoy to name a female technocratic candidate.

For critics, the fact that Mr. de Guindos has never worked at a central bank poses another problem. “Having a minister go directly to the ECB executive board, that’s not in order for an independent central bank,” said Sven Giegold, a member of the European Parliament from the Green Party. He announced a “campaign” against Spain’s candidate and called for a woman to be appointed as second-in-command at the ECB. In Frankfurt, there are similar reservations, with some at the European Central Bank complaining that Mr. de Guindos has no experience making monetary policy.

Although the European Parliament will hold a hearing after the vote by euro-zone finance ministers later this month, its members have no power to block Mr. de Guindos’ appointment. Their criticism could weigh on him, however, as he faces down a strong competitor in Philip Lane, the governor of Ireland’s central bank. Mr. Lane enjoys a sterling reputation within the currency bloc and among members of the ECB’s governing council. His selection would mark the first time in the euro-zone’s short history that Ireland was represented on the ECB board.

If Mr. de Guindos is passed over for the No. 2 spot at the ECB, it would be the second time that he’s narrowly lost out on such a high-profile position. In 2015, he was considered the favorite for the Eurogroup presidency, ostensibly with Germany’s support. Euro-zone finance ministers ultimately voted to give a second term to Jeroen Dijsselbloem of the Netherlands.

Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. Sandra Louven is Handelsblatt’s Madrid correspondent. Jan Mallien is Handelsblatt’s monetary policy correspondent in Frankfurt. Amanda Price in New York City adapted this story into English for Handelsblatt Global Edition. To contact the authors: berschens@handelsblatt.com, Louven@handelsblatt.com, mallien@handelsblatt.com

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