ECB gives top economics job to a Belgian
Frankfurt - The European Central Bank (ECB) handed Belgian Peter Praet its executive board economics portfolio on Tuesday, denying Germany for the first time the coveted job that brings with it responsibility for shaping monetary policy.
Praet, who joined the six-member board last year, replaces German arch-hawk Juergen Stark in the economics role - a position which gives him responsibility for setting the template for ECB interest rate decisions.
The board’s decision to give Praet the coveted portfolio smacks of a compromise. Newcomers Benoit Coeure of France and Joerg Asmussen of Germany, both of whom joined the board from January 1, had been seen as the frontrunners.
A German had previously always held the role - Otmar Issing preceded Stark - but Asmussen did not have as strong an economics background as Coeure, or Praet, who both hold doctor’s degrees in economics.
The economics role will allow Praet, who was born in Germany, to take the lead at ECB monetary policy meetings, suggesting what interest rate action the bank should take - a proposal that will then form the basis for discussion by the Governing Council’s 23 policymakers.
The development will make for disappointing news in Germany. Finance Minister Wolfgang Schaeuble said last year Asmussen was the best person for the role.
Germany had already lost its chance to claim the ECB presidency when Bundesbank chief Axel Weber quit last year in protest at the bank’s controversial bond-purchase programme, allowing Italian Mario Draghi to become the third ECB president.
Coeure had clearly set him apart from Germany’s orthodox central bankers, saying last month the ECB may need to step up its bond buying if the eurozone crisis prevents its interest rate decisions from having the desired impact.
Those comments put Coeure at odds with powerful Bundesbank chief Jens Weidmann, the ECB’s most vocal opponent of the bond-buy plan - a measure the German believes takes the ECB beyond its monetary policy mandate and into the fiscal policy arena.
Praet has kept a low profile since joining the board, speaking relatively rarely. When he has made public statements, he has carefully followed the line taken by the majority of the Governing Council.
In a speech last month in Vienna, the Belgian said that central bank bond buying was no silver bullet which would solve the problems the eurozone was facing.
The changes to the board have been brought about by the departure of Stark and Italian Lorenzo Bini Smaghi, who quit under political pressure following Draghi’s appointment as ECB president to make way for a Frenchman on the board.
The ECB said Asmussen will take the board’s international relations role on the ECB board and Coeure the market operations portfolio, which brings with it responsibility for overseeing the bond-buying programme.
Asmussen has been one of the key protagonists in Berlin’s response to both the global financial crisis and the eurozone debt crisis for the past three years. Coeure was previously deputy head of the French Treasury and is an expert on the European economy and a highly regarded economist.