Wednesday 19 December 2018

Battle of the governors as Ireland seeks ECB board seat

Central Bank Governor Philip Lane and his deputy, Sharon Donnery, are well regarded in Europe
Central Bank Governor Philip Lane and his deputy, Sharon Donnery, are well regarded in Europe

Dearbhail McDonald Group Business Editor

THE Governor of the Central Bank, Philip Lane, will be pitched against his Deputy Governor, Sharon Donnery, in a nomination battle for Ireland's first ever seat on the Executive Board of the European Central Bank (ECB).

On Tuesday, Finance Minister Paschal Donohoe will update the Cabinet on the Government's proposed nominee for the role of vice-president of the ECB's executive board.

ECB vice-president Vitor Constancio steps down in May after serving a non-renewable eight-year term and nominations for his replacement must be submitted by February 7.

Spain, the currency bloc's fourth-largest economy, has already made its case to regain the board seat it lost six years ago, with Economy Minister Luis de Guindos likely to be a frontrunner to succeed Mr Constancio.

However Mr Donohoe, a European People's Party colleague of Mr de Guindos, said Ireland is likely to seek at least one of the ECB's top posts.

Ireland is expected to nominate for the VP role, despite Mr de Guindos' frontrunner status, as a mark of the country's intent to secure a seat on the board.

In a Bloomberg Television interview yesterday on the sidelines of the World Economic Forum at Davos, Mr Donohoe said Ireland wants to be represented in the ECB's executive ranks.

"As these roles become available, I will make a decision on what we will do," said Mr Donohoe, adding that the Government will make a decision "imminently" on whether to put forward a candidate for any of the roles.

Ireland is the only founding member of the euro that has never had a seat on the Frankfurt-based bank's powerful executive board. Mr Lane and Ms Donnerty are the lead Irish candidates for ECB board vacancies. Both central bankers are also highly regarded in Frankfurt where they preside over key ECB committees.

Mr Lane, a member of the ECB governing council, is chair of the European Systemic Risk Board (ESRB) taskforce on safe assets which launches a major report on Monday.

The former professor of international macroeconomics at Trinity College Dublin also chairs the ESRB Advisory Technical Committee.

Ms Donnery, an economist who is an alternate member of the governing council and a member of the ESRB, is chair of the ECB's non-performing loans (NPLs) task force and also chairs its budget committee. Gender could prove critical as the ECB is under pressure to increase female representation on its executive board.

Only one woman, Germany's Sabine Lautenschläger, serves on the board. The December 2012 appointment of Luxembourg's Yves Mersch was held up due to the lack of female candidates at that time.

Should Mr Lane be successfully nominated, it could pave the way for Ms Donnery to succeed him in what would be Ireland's first ever female governor of the Central Bank.

Between mid-2018 and the end of 2020, five of the six current members of the ECB will need to be replaced, including President Mario Draghi.

The six members of the executive board are appointed by the European Council.

The six have permanent voting rights while the 19 national central bank governors rotate 15 votes among themselves each month.

Next week marks the 75th anniversary of the Central Bank of Ireland. It will be marked by a special symposium in Dublin on financial globalisation and Mr Lane and Ms Donnery will deliver keynote addresses. (Additional reporting Bloomberg)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business