Merkel Shifts ECB Tactics With Schnabel Pick for Board Seat

Merkel Switches ECB Tactics With Schnabel Pick for Board Seat

24 Oct 2019, 09:38 AM IST

(Bloomberg) --

Germany nominated Isabel Schnabel for the European Central Bank’s Executive Board, a change of strategy for Chancellor Angela Merkel after all three of her previous appointees failed to complete their terms.

Merkel Shifts ECB Tactics With Schnabel Pick for Board Seat

Unlike predecessors in the role who were drawn from either the Bundesbank or German politics, Schnabel’s career has remained firmly in academia. She is a professor of financial economics at the University of Bonn and has been an economic adviser to Merkel’s administration since 2014. If approved by European Union leaders, she’ll take the seat vacated by Sabine Lautenschlaeger, who announced her surprise resignation last month.

Finance Minister Olaf Scholz described the 48-year-old as an “outstanding economist” who will work well for the euro zone and for Germany. Schnabel said on Twitter that she is honored to be proposed and will do her best to meet the “high expectations” of her in the eight-year term.

German officials have a poor track record of finishing their stints on the ECB’s six-member board, which proposes and implements policy. Lautenschlaeger, a former Bundesbank vice president, will leave on Oct. 31, more than two years early. Her predecessor Joerg Asmussen, a former deputy finance minister, served only 24 months. Before him, Juergen Stark, another ex-Bundesbank vice president, quit after five and a half years.

Schnabel would also be joining the ECB just as pressure mounts on governments including Germany to add fiscal stimulus to accompany the institution’s monetary support. Questioned on the need for a budget boost in her country in May -- before more evidence of a deteriorating economy had emerged -- she seemed unconvinced at the time.

“Fiscal policy at the moment is relatively loose, so I wouldn’t worry about this too much,” she said on Bloomberg Television. “The German economy is doing still relatively well, so we are not approaching a recession.”

She’ll be one of two women on the six-member board, including incoming President Christine Lagarde. There are also no women currently in the rest of the Governing Council, which totals 25 officials including the board and national central bank governors.

The lack of gender balance at the top of the ECB has long been an embarrassment to the institution. The European Parliament delayed the ratification of Executive Board member Yves Mersch in 2012 as part of an effort to cajole euro-zone governments into fixing the matter.