The European Central Bank will soon fire the starting gun on a sweeping reshuffle of its top ranks — a contest that will ultimately decide who succeeds its president Christine Lagarde.
Four of the six jobs on the ECB’s executive board will become vacant by the end of 2027, beginning with vice-president Luis de Guindos, whose term will end in May. Lagarde, chief economist Philip Lane and Isabel Schnabel will all reach the end of their terms in 2027, sparking a competition between Eurozone capitals to secure the bloc’s most powerful monetary policy roles.
The race to replace de Guindos will coincide with leadership changes at the US Federal Reserve as the term of chair Jay Powell — whom US President Donald Trump has called a “numbskull” — also expires in May.
The ECB is poised to ask Brussels to begin the formal process of replacing de Guindos, according to three people familiar with the schedule. Eurozone finance ministers will start discussing the matter this week, one of the people said.
The nationality and monetary policy stance of the ECB’s next vice-president will carry significant weight in shaping Lagarde’s succession given the intricate balance of power among the Eurozone’s soon-to-be 21 members.
The ECB presidency is one of the best-paid jobs in the EU bureaucracy with a base salary of €466,000 a year, plus benefits, and an estimated six-digit sum for sitting on the Bank for International Settlements’ board of directors.
Behind the scenes jostling for the top job has already begun, with two main contenders manoeuvring to replace Lagarde: former Dutch central bank governor Klaas Knot and Bundesbank president Joachim Nagel.
A third candidate, who would “tick all the boxes” according to one of the people, is former Spanish governor Pablo Hernández de Cos, now general manager of the Bank for International Settlements and a respected former academic economist.
“Reflecting the full range of European member states on the ECB’s board is a highly complex task,” said Jens Eisenschmidt, Morgan Stanley’s chief Europe economist and a former senior ECB researcher.
There is an unwritten rule that no country can hold two board seats, and governments seek to balance hawkish and dovish positions. The eastern European and Baltic states that joined the Eurozone from 2007 are finally demanding a voice on the board, with Latvia openly gunning for a seat.
Finland has decided to put forward its central bank governor Olli Rehn, an economist and former EU commissioner, as a candidate for the vice-presidency, while Croatia’s government is poised to nominate its central bank governor Boris Vujčić, said one person familiar with the matter.
Rehn is one of the more dovish voices on the ECB’s governing council, warning of the risk of inflation undershooting the central bank’s 2 per cent target.
Gender balance is also a consideration. Historically, the ECB’s executive board has been heavily male-dominated. Since 1998, only 19 per cent of its 26 members have been women.
“France, as well as the European parliament, will particularly stress the gender issue,” said one person close to the debate.
France’s deputy central bank governor Agnès Bénassy-Quéré and her Greek counterpart Christina Papaconstantinou are viewed as strong female contenders for a board seat, as well as former OECD chief economist Laurence Boone and London Business School professor Hélène Rey, according to people familiar with the matter.
Lagarde, who earlier this year squashed rumours that she might leave the ECB prematurely, in October endorsed Knot as a potential successor.
“He has the intellect, the stamina [and] he’s capable of including people and that is a skill that is rare and very necessary,” she told Dutch podcast College Leaders in Finance, adding that chairing the governing council required good social skills as many national central bank governors were “prima donnas”. Knot “has that ability. But he’s not the only one”, she said.
Knot — a former academic economist with three decades of experience at the IMF, the Dutch Central Bank and the Financial Stability Board — started as a hawkish voice during the early days of the Eurozone sovereign debt crisis but subsequently took a more nuanced view.
An early supporter of former ECB president Mario Draghi’s “whatever it takes” approach to safeguard the euro during the crisis, he also was one of the voices in favour of the ECB’s still unused emergency bond buying scheme, the “transmission protection instrument”. This was established in 2022 to stop higher interest rates from triggering another debt crisis.
Some insiders think, though, that influential voices in Italy and other southern countries may have reservations over his past positions as he openly opposed Draghi’s controversial ultra-expansive monetary policy.
Nagel has started to lobby Berlin to back him as the next ECB boss, according to people familiar with the situation. He has recently done a series of speeches and interviews, including in Greece, Spain India and the US, including on topics such as “getting Europe fit for its new global role”. Germany, while the Eurozone’s single biggest member, has never held the ECB presidency.
“I think it would be about time [for a German to lead the ECB], but it’s complicated,” Lars-Hendrik Röller, who was former German chancellor Angela Merkel’s top economic adviser, recently told Bloomberg TV.
A well-connected member of Germany’s Social Democratic party, Nagel is seen as an affable person with middle-of-the-road views, according to ECB insiders. Bundesbank staffers who work closely with him describe Nagel as a “political animal”. Under his leadership, the Bundesbank has toned down its monetary policy orthodoxy. Nagel argued last year that “the underpinnings of Germany’s industrial machine are still intact”.
One of his obstacles will be Germany’s dominance in other key EU institutions: Ursula von der Leyen leads the European Commission, Claudia Buch the Single Supervisory Mechanism banking watchdog and Verena Ross chairs the European Securities and Markets Authority.
Historically, the ECB presidency was not regarded as being of strategic national importance in Berlin, in particular as winning it would require concessions in other areas. “I have no indication that this has changed with [Chancellor Friedrich] Merz,” said one government official in Berlin, adding that it was unclear to them why a conservative chancellor should fight for a Social Democrat.
Spain, like Germany, has never held the ECB presidency and is the only large Eurozone economy that currently boasts meaningful growth. After de Guindos’s exit, Spain also will not be represented on the executive board.
Hernández de Cos, a former lecturer in economics at Spanish business school Instituto de Empresa and Carlos III University of Madrid, has both academic and institutional experience. As Spanish governor, he made his name as a pragmatic voice on the governing council.
But the ECB job tends to be part of wider horse-trading between Eurozone members. A potential victory of a far-right Rassemblement National candidate in the 2027 French presidential election could complicate the process even more.
“Unfortunately, qualifications are not necessarily the decisive factor,” said one central banking veteran.
The ECB, Hernández de Cos, Knot, Rehn, Nagel and Vujčić all declined to comment.
Data visualisation by Ella Hollowood in London
