French bond-market stress could strengthen Klaas Knot’s chances of becoming the next ECB president. EU leaders aim to appoint Christine Lagarde’s successor at a December 17-18 summit.
The ECB’s response to serious stress in the French bond market could shape the choice of Christine Lagarde’s successor, according to a note from Societe Generale economist Anatoli Annenkov. The likely candidates are former Dutch central bank governor Klaas Knot and Pablo Hernandez de Cos, head of the Bank for International Settlements and former head of Spain’s central bank.
The presidential choice is likely part of a package deal involving replacements for Executive Board members Isabel Schnabel, who heads market operations, and Chief Economist Philip Lane. Annenkov says Germany appears determined to retain Schnabel’s portfolio, while France is likely to seek the chief economist position.
Annenkov says a Spanish ECB president, potentially seen as more dovish, combined with a French chief economist could be controversial given concerns about renewed turbulence linked to France’s fiscal challenges and the need for a hawkish ECB stance on support conditional on national corrective action. He says this may encourage some northern and eastern capitals, including Paris if it wants German support for the chief economist position, to support Knot.
