An upcoming decision in Europe could change the course of its monetary policy

FAN Editor

The 19 finance ministers of the euro zone are set to discuss Monday who should become the next vice president of the European Central Bank (ECB).

The appointment will be the first in a reshuffle in positions within the central bank that could change the course of its monetary policy.

Four out of six positions within the ECB executive board will have to be replaced by the end of 2019. The first of these will take place on June 1, which will be the new vice president’s first day on the job.

There are two names on the table to replace Vitor Constancio as ECB vice president.

They are Spanish Economy Minister Luis de Guindos and Philip Lane, the governor of Ireland’s central bank. Expectations are that Luis de Guindos will be the choice among the finance ministers. Spain has often argued that it hasn’t had a member on the ECB’s executive board in the last six years.

This could mean that the next ECB president – a role that becomes vacant next year – is more likely to come from a northern European country and thus a more hawkish member when compared to incumbent Mario Draghi.

However, the election of Luis de Guindos is not certain, given that he doesn’t have experience in central banking. Constancio served as governor of the Bank of Portugal prior to moving to Frankfurt.

This is where the candidacy of Philip Lane, governor of the Irish Central Bank, could prove important given his experience in monetary policy. Furthermore, Lane is already a member of the ECB’s governing council and is therefore aware of how the institution works and thinks.

But media reports have suggested that Ireland is not actually interested in the vice presidency and it is instead lobbying for the position of ECB chief economist, which will be vacant next year.

The 19 finance ministers will discuss Monday and potentially vote on Tuesday, if there’s no consensus, on their preference for the next ECB vice president. Fourteen out of the 19 ministers need to approve the same name.

That name will then be assessed in March by the heads of state of the euro zone at a summit, who will then give the final greenlight to the appointment.

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