The biggest task for Lagarde will be to revive the euro zone economy. (Image via: Businesslive.co.za)

Christine Lagarde to Lead European Central Bank

Kirana Chandra Mumpuni Budiana
Market & Investment
Export Import
Jul 03, 2019
2528
On Tuesday, the member states of the UN agreed to nominate Christine Lagarde as the leader of European Central Bank. The 63 years old Lagarde was the former French finance minister. Christine Lagarde is also the first woman to lead the Washington-based IMF since 2011. She will be the successor of Mario Draghi, the current leader of European Central Bank, whose term ends on Oct. 31 and can’t be renewed.
As for the formal approval of Lagarde’s position, it will come in the coming months through a series of procedural moves. The senior EU jobs require the ability to reconcile demands from the most powerful members of the bloc. It will be reasonable for the EU leaders to let France claim the European Central Bank presidency. Emmanuel Macron, the French President, give Christine Lagarde’s name and it has been approved by other leaders in the meeting.

Christine Lagarde played an instrumental role in securing bailouts for unhealthy economies in Europe, especially Greece. That was following the 2008 financial crisis. Previously, she worked in the private sector as an antitrust lawyer. Lagarde became a partner and then the first female chairman of the Chicago-based law firm Baker McKenzie. The nomination of Lagarde comes as a surprise. There were speculation in recent months about the leader of European Central Bank. The names in the speculation were German central bank head Jens Weidmann, French European Central Bank members Benoît Coeuré and François Villeroy de Galhau, as well as former Finnish central banker Erkki Liikanen. However, it turned out Lagarde won the nomination.

Lagarde’s experience at the IMF will be her strenght to deal with any political pressure from European governments. However, she lacks the monetary policy experience of the other candidates at a time. European Central Bank officials have recently flagged the possibility of interest-rate cuts. The European Central Bank's deposit rate already at minus 0.4% and this could damage banks. That means Lagarde will have a lot of work to fix the situation in European Central Bank.

In addition, EU leaders nominated Ursula von der Leyen as the president of the European Commission. She's the current German Defense Minister. She will be the successor of Jean-Claude Juncker. Ursula von der Leyen is considered a close ally of German Chancellor, Angela Merkel. The new commission will begin its five-year term on November 1. Ursula von der Leyen and her still-unknown commission members must first be approved by the European Parliament. EU leaders also nominated Spain's foreign minister, Josep Borrell, to become their foreign-policy representative. Charles Michel, the current Prime Minister of Belgium, was named president of the European Council.

Source: https://mobile.reuters.com/article/amp/idUSKCN1TW3YC

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