Eurozone finance ministers chose Spanish Economy Minister Luis de Guindos to become the next vice-president of the European Central Bank (ECB), marking the return of Spain to top EU posts after the country lost its chair in the bank’s Executive Council.
Eurogroup President Mario Centeno announced after the meeting yesterday evening (19 February) that the decision was taken by unanimity.
De Guindos, the most senior member of the Eurogroup, was the only candidate after Ireland withdrew its central banker, Philip Lane, from the race.
He will take over from Portuguese Vítor Constâncio on 1 June.
His nomination will be confirmed today (20 February) during the Ecofin Council gathering the EU’s 28 finance ministers. He will be grilled by MEPs next Monday (26 February) and the ECB will issue a statement giving its blessing in the coming days, sources said.
EU leaders are expected to ratify the nomination during the European Council on 22-23 of March.
Independence at stake?
The Spanish minister does not want to be seen either as a ‘hawk’ or as a ‘dove’ in the realm of monetary policy. Instead he describes himself as a “pragmatic”.
The Spanish minister told reporters that he would resign “in the coming days” after he speaks with Prime Minister Mariano Rajoy.
The unprecedented decision to send a politician directly from a eurozone ministry to the ECB’s Executive Council was seen by critics as a blow to the central bank’s independence.
“When the Eurogroup appoints its own member, it demonstrates its own conflict of interest,” said Green MEP Sven Giegold.
But the Spanish minister argued that all candidates, including politicians, are legitimate contenders for the post.
He said that he “always defended the independence of the ECB” and that he would continue to do so.
Other Eurogroup and Commission members ruled out the risk of politicising the Frankfurt-based institution.
“De Guindos would do an excellent job,” said Irish Finance minister Paschal Donohoe. “His qualifications and experience as finance minister equip him very very well to do the work,” he told reporters as he announced Lane’s withdrawal.
“De Guindos has all the skills to be a good vice-president of the ECB,” added French minister Bruno Le Maire. He said that France supported the Spanish minister because “we believe he is the right man at the right place”.
Pierre Moscovici, the EU’s Economic Affairs Commissioner, highlighted that De Guindos has “a lot of experience and can adapt and be a good vice-president.”
“Politicians are people who have a lot of experience and have worked on these dossiers for quite a while and have the capacity to learn,” he explained.
On his way into the meeting, Donohoe announced that he withdrew the candidacy of Lane, a well-regarded economist with a solid academic record.
Donohoe explained that, given the importance of the post and “in the interest on the functioning and success of the ECB”, Dublin considered it “very important” that the decision was taken by consensus.
The Eurogroup did not want to force a vote to pick the winner, not only to maintain the consensus around the selected name but also because all member states who took sides supported De Guindos.
Among the big countries, only Italy kept its cards close to its chest. Spain did not support Milan to host the European Medicines Agency, currently based in London, after the UK’s departure from the EU. At the end of the day, Amsterdam was the city selected.
De Guindos’ nomination comes amid opposition from leading MEPs in the European Parliament’s Economic Affairs Committee and lukewarm support inside the ECB. Spain’s socialists (PSOE), the largest opposition party in the country, did not support him either.
The Spanish government said for months that the post was promised to Madrid after the EU’s fourth largest economy exited the bank’s Executive Council. According to a gentlemen’s agreement between Germany, France, Italy and Spain, the four economies would always hold a chair in the six-member executive body of the institution.
But Centeno played down the importance of this back-door deal, and said that the decision was made on the basis of his profile as a “decision maker”, his “good judgement”, and his capacity to steer the Spanish economy through a “very serious crisis”.
He insisted that the process had been “very transparent and open”, despite the decision being taken in a closed-door meeting as Eurogroup debates are not public.
Earlier exchange of views with the contenders in Parliament also took place in a closed-door session. The public hearing next Monday will not alter the decision made by the Eurogroup.
A senior EU source admitted that Germany’s support was part of a strategy to conquer the ECB presidency when Mario Draghi leaves on later next year.
But De Guindos said there was “not conditionality attached at all” to his nomination.
Supported by Berlin, the Spanish minister also unsuccessfully tried to become Eurogroup president in 2015.
The job description of the vice-presidency is not set in stone and adapts to the holder. Constâncio was in charge of financial stability given his interest in the matter. The vice-president also chairs the governing council meetings when the president is not in the room.
Guindos will take over at a critical time for the institution as it starts to exit the monetary stimulus put in place in the aftermath of the financial crisis, and has to raise interest rates without derailing economic growth.
Lane’s withdrawal now may bolster his candidacy for another of the four ECB Executive Council’s posts that would be available by 2020, in particular the chief economist post.
Donohoe said that when he sounded out his Eurogroup colleagues he noticed a “widespread acknowledgment of Lane’s track record and the very important work that he might be able to do in the ECB in the future.”
“Lane will continue being a good candidate in the future,” commented De Guindos.