Business Irish

Sunday 18 February 2018

Schaeuble backs female banker for ECB board role

Bundesbank vice president Sabine Lautenschlaeger
Bundesbank vice president Sabine Lautenschlaeger

Sakari Suoninen and Eva Taylor

Sabine Lautenschlaeger, a German bank supervision expert with no monetary policy record, is an early favourite to replace Joerg Asmussen on the ECB's executive board after his decision to leave early to spend more time with his family.

Ms Lautenschlaeger (49), who was praised by German Finance Minister Wolfgang Schaeuble yesterday as a worthy candidate to replace Asmussen, is vice president of the Bundesbank and analysts said her appointment could herald a more united, hawkish German stance within the ECB's rate-setting council.

Mr Asmussen acted as a balancing force in his two years at the European Central Bank, siding with President Mario Draghi in a dispute with the Bundesbank over bond-buying at the height of the euro crisis, but more recently opposing the Italian's push to cut interest rates.

"I would expect there to be a bit of a shift to a more hawkish side of decision-making, but it would not tip the balance from doves," said Elwin de Groot, an economist at Rabobank.

The ECB surprised with an interest rate cut in November, which around a quarter of the 23-strong Governing Council were against, with Bundesbank chief Jens Weidmann leading opposition. Ms Lautenschlager's addition to that group will not be enough to tilt the balance.

A Reuters poll of economists last week found 25 of 40 said the ECB's next salvo would be to prime banks with more cheap cash, probably early next year.

Mr Asmussen's departure, to take a less prestigious post as state secretary at the German labour ministry in Berlin, where his family live, is the third early exit by a prominent German central banker in as many years.

But unlike former Bundesbank president Axel Weber and board member Juergen Stark, who stepped aside because they disagreed with ECB crisis-fighting policies, Mr Asmussen's reasons for leaving appear to be personal. (Reuters)

Irish Independent

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