Three bankers lead the pack for reps

The ECB succession race has intensified as speculation over Christine Lagarde’s early exit is fueling the three leading central bankers.

Recent reports suggest that European Central Bank President Christine Lagarde may step down before the end of her eight-year term in October 2027. Times remain uncertain; She may stay or may leave before that time to take charge of the World Economic Forum.

Lagarde “has not made any decisions,” the ECB said in a written statement, but speculation of an early departure was being taken seriously as it would ensure French President Emmanuel Macron’s influence in choosing the central bank’s future leadership.

Macron will leave the Elysee Palace in 2027, and could be replaced by a populist far-right candidate. The situation will complicate the selection of the next ECB chief. Should Lagarde leave her post early, Macron will still remain in the driver’s seat to protect France’s priorities.

Who could be Lagarde’s successor?

Three current and former central bank leaders are already believed to be in the running to succeed Lagarde: Clas Knut, former chairman of De Nederlandsche Bank (DNB); Pablo Hernández de Cos, former governor of the Bank of Spain; and Joachim Nagel, President of Germany’s Bundesbank.

Nagel, 59, has the strongest credentials on paper. Already a member of the ECB Governing Council, he belongs to one of the four countries—Germany, Italy, Spain, France—that dominate the selection process.

While his reputation is that of a hawk who emphasizes price stability and fiscal flexibility, he has demonstrated flexibility by supporting the use of Eurobonds to finance the EU’s joint defense spending. The downside is that Nagel’s appointment would be seen as pushing Germany’s advantage too far, given that a compatriot, Ursula von der Leyen, is head of the European Commission.

Knott, 58, another inflation advocate, was chairman of the DNB for 14 years. But the Netherlands is not one of the four largest European countries that typically puts its candidates in top positions. Hernandez de Cos, 55, a pigeon, may have the edge.

When the economic think tank OMFIF (Official Monetary and Financial Institutions Forum) surveyed 20 experts on candidates to lead the ECB, he received praise as a leader, a consensus builder and a crisis manager.