Schnabel steps down early from the Monetary Fund. The ECB’s ‘Risiko’ game begins
From January, the German economist will be a financial adviser and director of the Monetary and Capital Markets Department at the International Monetary Fund. President Lagarde’s term of office expires in October 2027 – there has been speculation that she may step down early – whilst that of Chief Economist Philip Lane ends at the end of May.
“At a time when difficult choices about our future and our security will shape the lives of generations to come – our children and our grandchildren – we women must play a central and equal role in making these choices.” This was stated yesterday by the President of the ECB, Christine Lagarde, in her video address at the opening of the Women Economic Forum Europe at Tabiano Castle, near Salsomaggiore Terme. It is a pity that the only two women currently sitting on the ECB’s Governing Council will have left the European Central Bank’s Board before the end of their terms of office by next January: Schnabel for certain, and Lagarde almost certainly. This will further heighten the uncertainty gripping the markets, which are already grappling with two ongoing wars in Ukraine and Iran and the unpredictability of US President Donald Trump.
The European Central Bank confirmed yesterday that Schnabel had resigned early, a move that had been on the cards since early September following an exclusive report by *Handelsblatt*. The German economist, who was due to remain on the Executive Board until 31 December 2027, will take up the new post of Financial Counsellor and Director of the Monetary and Capital Markets Department (MCM) at the International Monetary Fund from 4 January 2027. Lagarde, on the other hand, has never denied (nor confirmed) her early departure in 2027: her term expires on 31 October 2027, but the fact that her autobiography is due to be published in January next year has fuelled rumours of her taking up the post of President of the World Economic Forum from January.
On 31 May 2027, the term of office of the Irish chief economist, Philip Lane, will also come to an end; France is keen to secure this post, as it carries significant weight in monetary policy decisions.
It is reported that the French presidential elections – the first round of which is due to take place on 18 April 2027 – are the catalyst for the early ‘reshuffle’ at the ECB, involving the positions held on the Governing Council by Schnabel and Lagarde, in order to coincide with Lane’s departure. It appears that, in order to stem the rise of the Rassemblement National, a ‘Brandmauer’ is being established at European level, similar to the one in Germany designed to prevent the far-right AfD party from entering a federal government in coalition with mainstream parties.
Speculation over the ECB presidency has been rife for months. It remains to be seen which factors will prevail, given that the Croatian Vice-President, Boris Vujčić – who is highly regarded and very competent – is considered a moderate hawk: if the next ECB president were to be a German for the first time, it could only be a moderate hawk, such as Joachim Nagel, the current president of the Bundesbank. Klaas Knot, former president of the Dutch Central Bank and an authoritative voice amongst Eurosystem central bankers, is also a moderate hawk and in pole position for the top job at the ECB. The Spaniard Pablo Hernández de Cos, general manager of the BIS, would, on the other hand, be a president more to the doves’ liking. To ensure female representation on the ECB’s Governing Council, the French should appoint a woman as chief economist.
