It's not just the economy, stupid
When Jean-Claude Trichet hands over the reigns of the Presidency of the European Central Bank in November, his successor will need skills which go well beyond monetary policy. The financial crisis and resulting scramble to reform regulatory architectures have further intertwined the roles of central bankers and finance ministers. Moreover, central bankers are increasingly important international economic diplomats as global convergence on regulatory responses becomes essential. If this wasn't enough, the ECB's political know-how will be further tested with its new role in macro-prudential supervision as chair of the new European Sysytemic Risk Board, which will enter into force in January.
The front runners to take up the post are Axel Weber, President of the Bundesbank and Mario Draghi, Governor of the central bank of Italy and Chair of the Financial Stability Board. While both candidates have formidable economic experience, they need to demonstrate political credentials to fit the bill. Draghi may possess such skills more naturally than Weber but his own country's fiscal position and a lack of support from Italy's finance minister make his candidacy an uphill struggle. Weber - who has been criticised for his handling of controversial comments made by a Bundesbank exec board member - may need to learn fast that the ECB is not all about economics.
Michael Cooper
Senior Consultant
September 28 2010