ECB Fresh Faces Make Central-Bank Watching Harder for Investors
ECB Fresh Faces Make Central-Bank Watching Harder for Investors
(Bloomberg) -- The European Central Bank will have some fresh faces when officials meet in Vilnius this week, and more are on the way in a sweeping reshuffle that could alter the way the institution thinks about euro-zone monetary policy.
At least 10 of the Governing Council’s 25 members are exiting this year. While President Mario Draghi’s departure in October is the most high-profile, less noticed is that half the powerful Executive Board and a number of national central bank governors are reaching the ends of their terms. Euro-area governments decide who replaces them.
That overhaul could shift the balance between so-called doves who believe the economy needs continued stimulus, and the hawks who say Europe must snap its addiction to central-bank cash. For investors, it creates the risk of missteps as they try to gauge how the ECB will react as the euro zone tackles a dangerous slowdown in growth.
“What’s interesting to know when we are getting a new generation of central bankers is: are they all equally convinced about the effectiveness of different instruments -- are they equally keen on negative rates?” said Anatoli Annenkov, senior economist at Societe Generale in London. “That might be surprising.”
First Timers
Newly appointed Slovak central-bank chief Peter Kazimir will be at his first Governing Council meeting this Thursday. The 50-year-old former finance minister earned a hawkish reputation backing Germany’s tough stance during Greek bailout talks. An avid Twitter user, he planned for his nation’s first balanced budget this year.
Ireland’s Sharon Donnery is set for a short stay on the panel. She’s acting governor of the Irish central bank after being beaten to the top job by Gabriel Makhlouf, the head of New Zealand’s Treasury and a former U.K. civil servant who’ll start in September. Former Governor Philip Lane will also be there, but in an influential new role -- he started this month as a member of the ECB’s Executive Board and the institution’s top economist, meaning he’ll present the board’s policy proposals.
Settling In
Pierre Wunsch, 51, became the new head of Belgium’s central bank in January. He holds a degree from Princeton and an economics PhD from UCL, and is generally considered to be more hawkish than his predecessor Jan Smets. He’ll sit next to Bundesbank President Jens Weidmann at meetings. The two men opened a joint exhibition in Brussels last month, where they described their institutions’ close collaboration.
Slovenian Governor Bostjan Vasle also started at the beginning of this year. The 49-year-old told Bloomberg in an interview last month that the euro-area economy is still on track with the ECB’s March forecasts -- which foresaw an upturn later this year.
Constantinos Herodotou was promoted to run the Cypriot central bank in April, taking over from Chrystalla Georghadji. His public comments since taking office have focused on attempts to rid Cypriot banks off bad loans rather than on monetary policy. The former UBS investment banker also had a stint in charge of privatizing state assets in Cyprus.
Coming Soon
Estonia’s new governor, Madis Muller, will take over from Ardo Hansson the day after the June 6 policy meeting. The 42-year-old has a finance degree from George Washington University, and worked at the World Bank and the International Finance Corporation before becoming deputy governor in 2011. In his first comments after being appointed in February, he stuck closely to his predecessor’s hawkish line by calling current policy very accommodative and for the exit to be done skillfully.
Austria’s Robert Holzmann is scheduled to join the Governing Council in September, despite the political chaos in his homeland. Holzmann was appointed by the nationalist Freedom Party, which was ousted from the ruling coalition amid a scandal last month. The 70-year-old has been an academic with a focus on labor markets, pensions and social-security systems and has worked at the OECD, IMF and World Bank, though little is known about his views on monetary policy.
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Known Unknowns
The biggest question marks are those over two of the biggest ECB appointments this year. European leaders are already haggling over who should succeed Draghi, whose extraordinary stimulus measures over his eight years in office transformed the institution and -- he would argue -- saved the euro area from deflation.
But another key figure in those unconventional policies was Benoit Coeure, whose Executive Board term ends in December. The 50-year-old Frenchman might even succeed Draghi, offering some continuity but leaving open another question -- who succeeds him.
--With assistance from Carolynn Look.
To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien
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