Dutchman and Spaniard in two-horse race for ECB presidency

The choice for European Central Bank President Christine Lagarde’s successor probably comes down to Dutchman Klaas Knot and Spaniard Pablo Hernandez de Cos.

The Netherlands and Spain each nominated their former central-bank chiefs to replace Lagarde when she departs in February, Kyriakos Pierrakakis, who heads the group of euro-area finance ministers, said Friday in a statement. De Cos currently leads the Bank for International Settlements.

“At its next meeting on 9 November, the Eurogroup will take stock of these candidacies,” the group said.

While no other candidate was proposed before Friday’s deadline of 5 p.m. in Brussels, a surprise late-stage contender could yet appear once political bargaining starts in earnest, just like Lagarde did in 2019.

Her position is part of what Greece’s prime minister has called a “grand bargain,” including the jobs of Executive Board member Isabel Schnabel and Chief Economist Philip Lane, with the former leaving the ECB early in January 2027 and the latter in May, when his eight-year term ends.

That will be one of the biggest reshuffles of the six-strong board since the institution’s inception more than 25 years ago. If Knot were to become president, it would even involve a fourth job as his fellow countryman Frank Elderson would have to leave.

The changes come at a delicate time, with inflation running at double the ECB’s 2% target and fiscal stress worrying investors in France.

While the euro zone’s 21 finance ministers will assess candidates on Monday, the final decision rests with European leaders. That puts the spotlight on an informal summit scheduled for Nov. 13 and a special one on Nov. 26-27.

Crucial to the selection will be an agreement between the leaders of the region’s two biggest economies, German Chancellor Friedrich Merz and French President Emmanuel Macron.

Both countries are looking to maintain their presence on the ECB board, with Spain also pushing for a seat after Vice President Luis de Guindos retired earlier this year.

France appears keen to get Lane’s position and is well prepared. It can pick from candidates including Bank of France Deputy Governor Agnès Bénassy-Quéré and former OECD official Laurence Boone.

Germany’s coalition has yet to agree on a candidate to replace Schnabel, with former International Monetary Fund official Tobias Adrian and Bundesbank Vice President Sabine Mauderer among those in the running.

In an interview with Swiss newspaper Tagesanzeiger published Saturday, de Cos said policy makers need to be “vigilant” about inflation risks, though so-called second-round effects stemming from an Iran-war induced energy price surge haven’t materialized so far.

He also indicated concern over high debt levels in some economies, a risk factor in a period when the cost of borrowing is likely to rise further.

De Cos declined to comment directly on his candidacy in the interview.