Finn most likely to take over from Draghi, say economists

The Irish Times - Business - - BUSINESS NEWS - CLAIRE JONES in Frank­furt

Erkki Li­ika­nen, the for­mer Bank of Fin­land gov­er­nor, is the most likely – but not nec­es­sar­ily the best – can­di­date to suc­ceed Mario Draghi as pres­i­dent of the Euro­pean Cen­tral Bank, ac­cord­ing to a poll of economists.

Benoît Coeuré, one of the ex­ec­u­tive board mem­bers at the ECB, emerged in the Fi­nan­cial Times’s in­for­mal poll as the pre­ferred can­di­date to take over.

Mr Draghi is set to de­part at the end of Oc­to­ber af­ter a tu­mul­tuous eight years in charge, dur­ing which time he is widely cred­ited with staving off a col­lapse of the single cur­rency area.

The ECB’s lead­er­ship is one of the top jobs in Euro­pean pol­i­cy­mak­ing to be de­cided dur­ing 2019. Mr Draghi’s suc­ces­sor will have to de­cide how quickly to steer the euro zone out of an era of ul­tra-loose mone­tary pol­icy that has dom­i­nated the Ital­ian’s term.

Of the 24 economists polled by the Fi­nan­cial Times , Mr Coeuré was a favoured can­di­date named by seven re­spon­dents. How­ever, just one re­spon­dent thought Mr Coeuré most likely to be picked.

That com­pared with eight votes for Mr Li­ika­nen, whom three re­spon­dents said they would like him to get the job.

“My choice and my bet is Erkki Li­ika­nen,” said An­dre Sapir, a se­nior fel­low at Bruegel and a pro­fes­sor at the Free Uni­ver­sity of Brus­sels. “He com­bines his cen­tral bank ex­pe­ri­ence with im­pres­sive po­lit­i­cal ex­pe­ri­ence at home as min­is­ter of fi­nance and in the Euro­pean Com­mis­sion, where he had two man­dates as com­mis­sioner.”

Be­fore Mr Li­ika­nen left the Bank of Fin­land in the sum­mer, he was the long­est-serv­ing mem­ber on the ECB’s rate-setting gov­ern­ing coun­cil. He also played an im­por­tant role in re­shap­ing how banks are reg­u­lated af­ter the global fi­nan­cial cri­sis, head­ing a com­mis­sion that ad­vised Brus­sels on how to re­struc­ture the sec­tor.


François Villeroy de Gal­hau, Banque de France gov­er­nor, is also among the favourites to win the race, with six re­spon­dents say­ing he would be named as Mr Draghi’s suc­ces­sor.

Danae Kyr­i­akopoulou, chief econ­o­mist and head of re­search at the think tank Of­fi­cial Mone­tary and Fi­nan­cial In­sti­tu­tions Fo­rum, said Mr Coeuré, an­other French­man, would “make an ex­cel­lent choice” but would strug­gle to se­cure the nom­i­na­tion be­cause of le­gal rules that limit ex­ec­u­tive board mem­bers to one term of eight years.

Mr Coeuré’s term is set to ex­pire around the turn of 2020. It is not clear whether an ECB pres­i­dent could win an­other eight-year man­date how­ever, and some con­sider an ex­cep­tion to the rule pos­si­ble.

Ken Wat­tret, chief Euro­pean econ­o­mist at IHS Markit, a re­search firm, de­scribed Mr Coeuré as “an ex­pe­ri­enced, su­per-smart con­ti­nu­ity can­di­date, lim­it­ing han­dover risk”.

Jens Wei­d­mann, the Bun­des­bank pres­i­dent and an early fron­trun­ner in the ECB lead­er­ship race, was only seen by three re­spon­dents as likely to suc­ceed Mr Draghi. The shift comes af­ter re­ports this year that Ger­man chan­cel­lor An­gela Merkel would pre­fer the Euro­pean Com­mis­sion pres­i­dency for the euro zone’s largest econ­omy and not the ECB job.

Mr Wei­d­mann is un­pop­u­lar in sev­eral other Euro­pean cap­i­tals, no­tably Paris, for his re­fusal to back a se­ries of mea­sures aimed at staving off a se­ri­ous bout of stag­na­tion in the euro zone. “Un­for­tu­nately, the politi­cians do not want Wei­d­mann as the next ECB pres­i­dent. Who­ever fol­lows Draghi will more or less con­tinue his poli­cies,” said Jo­erg Kramer, chief econ­o­mist at Com­merzbank.

Ger­many has never had a head of the ECB. Jean-Claude Trichet, a French­man, served an eight-year term be­fore Mr Draghi took charge.

Olli Rehn, Mr Li­ika­nen’s re­place­ment as Bank of Fin­land head and a for­mer vice-pres­i­dent of the Euro­pean Com­mis­sion, was named by five peo­ple as a lead­ing can­di­date.

Re­spon­dents did not ex­pect a re­place­ment for Mr Draghi to be an­nounced un­til af­ter the Euro­pean elec­tions in May. – Copy­right The Fi­nan­cial Times Lim­ited 2018

Erkki Li­ika­nen: for­mer Bank of Fin­land gov­er­nor

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