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Grilling by EU Lawmakers Awaits Lagarde’s Future ECB Colleague

Grilling by EU Lawmakers Awaits Lagarde’s Future ECB Colleague

Frank Elderson might have some convincing to do during his first public appearance as a prospective European Central Bank official on Monday as lawmakers grill him on his candidacy for the job.

The Dutch supervisory official will appear before European Parliament members in Brussels who have long lobbied for a greater choice of potential nominees offering more gender balance than the sole male option they have before them.

For the Conservatives forming the largest bloc in the European Union assembly, “the quality of the candidate and his performance at the hearing will play an important role,” said Markus Ferber, a German member of the group. “But I can imagine that other groups will also use other criteria, which makes it difficult to predict the outcome.”

Grilling by EU Lawmakers Awaits Lagarde’s Future ECB Colleague

Lawmakers on the assembly’s Committee on Economic and Monetary Affairs will vote on Elderson’s nomination this week in a symbolic ballot. If he clinches its backing, that would pave the way for him to join ECB President Christine Lagarde’s six-member Executive Board without a hitch.

But while Parliament doesn’t have the power to block such selections, Elderson will be only too aware of its capacity to cause trouble if governments ignore lawmakers’ views.

The Dutch central banker is replacing Luxembourger Yves Mersch, whose own candidacy was obstructed for half a year in 2012 as lawmakers complained at the ECB’s lack of diversity.

This time, Parliament could potentially wield greater leverage than usual, considering Elderson’s appointment is seen as a precursor to his selection to replace Mersch as vice chair of the ECB’s bank supervision arm. If he returns to win approval in that role, the assembly does have the theoretical power to block him.

The longstanding complaint among some lawmakers is that the EU’s financial institutions lack female leadership. The ECB itself only just got its first woman in charge when Lagarde was appointed in 2019, and the six-member board has never achieved gender balance.

Grilling by EU Lawmakers Awaits Lagarde’s Future ECB Colleague

Last year, lawmakers called on governments to present at least one man and one woman per nomination procedure. In October, with no female candidate to choose from, the euro region’s finance ministers instead agreed on Elderson as the sole contender.

“I find it quite ironic that the Eurogroup is proposing a man to replace Mersch, who was probably the only one to get a negative opinion because of gender issues,” said Gregory Claeys, senior fellow at Bruegel, a think tank. “It now seems like the Eurogroup simply ignored them.”

Parliament’s struggle to make its opinion heard has been a longstanding frustration. In 2018, lawmakers said they preferred Philip Lane as the ECB’s vice president, but governments went ahead with Luis de Guindos. Lane was subsequently tapped as the ECB’s chief economist.

Sincere Hope

The committee will hold a secret vote some time after Elderson’s appointment hearing. The 50-year-old has already sought to convince lawmakers of his suitability by backing the ECB’s emergency measures and highlighting the central bank’s responsibility in fighting climate change.

“I sincerely hope that you will consider me on the basis of my qualifications,” Elderson said, in a written reply to questions from lawmakers, when asked whether he would accept the appointment even if the parliament were to disapprove of him.

While Green Party lawmakers might normally be keen on a candidate such as Elderson because of his climate-change credentials in central banking, that grouping has also voiced some of the strongest concerns over gender balance. The Socialists and the Liberals, which have also called for more female candidates, could maybe join them.

“Parliament has said that they will object to every shortlist that doesn’t have a representative of each gender,” said Sven Giegold, a Green Party lawmaker. “So it should oppose this nomination.”

©2020 Bloomberg L.P.