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Eurozone finance ministers opened talks Monday on who should succeed Christine Lagarde at the European Central Bank, a choice that comes as higher energy prices complicate the bank’s decisions on interest rates. Spain nominated Pablo Hernández de Cos, a former governor of the Bank of Spain who now heads the Bank for International Settlements. The Netherlands put forward Klaas Knot, its former central bank chief.
For households in Cyprus, the stakes are easiest to see in a mortgage payment. ECB decisions influence what banks charge on new loans and can affect monthly payments on variable-rate mortgages as their benchmark rates change. Those decisions are made by the bank’s Governing Council, which the president chairs. The council kept its key rates steady in October, holding its benchmark deposit rate at 2.50% while warning that rising energy costs could push inflation higher and slow growth.
Three jobs, one negotiation
Lagarde is due to step down on Feb. 7, about nine months before her term ends. Two other seats on the ECB’s six-member Executive Board are also opening up. Isabel Schnabel, who oversees market operations, leaves in January, and chief economist Philip Lane’s term ends in May. Officials told Reuters the three jobs are likely to be negotiated together, with France and Germany’s preferences for the other posts potentially shaping the contest between Spain and the Netherlands.
Eurogroup President Kyriakos Pierrakakis described Monday’s discussion as a first look at the candidates. He said he planned to discuss the process with European Council President António Costa and hopes to have it wrapped up by the end of the year. Finance ministers recommend a candidate, the ECB and the European Parliament are consulted, and EU leaders make the final appointment.
Cyprus Finance Minister Makis Keravnos was also in Brussels for talks on defense financing with NATO Secretary-General Mark Rutte. Ministers were looking at whether buying equipment together could stretch defense budgets further. At a separate meeting Monday, EU finance ministers were seeking agreement on higher minimum tobacco taxes and common rules for products such as vapes and nicotine pouches.
