The European Central Bank (ECB) is entering a pivotal phase of leadership transition as four of its six executive board seats — including that of President Christine Lagarde — are set to become vacant by 2027. The reshuffle will trigger a fierce contest among Eurozone capitals, shaping the bloc’s monetary direction for the next decade.
A Transition of Historic Scale
The first major change will come in May 2025, when Vice-President Luis de Guindos completes his term. His departure will initiate a formal process — expected to be launched soon after ECB approval — with Eurozone finance ministers beginning discussions this week, according to officials familiar with the timetable.
Following de Guindos, the positions of Lagarde, Chief Economist Philip Lane, and Executive Board member Isabel Schnabel will all expire in 2027, setting the stage for an unprecedented reshuffle at the ECB’s top table.
The presidency, one of the most influential posts in global finance, comes with a base salary of €466,000 plus benefits and an additional six-figure stipend for serving on the Bank for International Settlements’ board.
The Race for Succession
Behind the scenes, maneuvering to succeed Lagarde has already begun.
Two names top the list of potential successors:
- Klaas Knot, former governor of the Dutch central bank, and
- Joachim Nagel, president of Germany’s Bundesbank.
A third possible candidate, Pablo Hernández de Cos — Spain’s former central bank governor and now general manager at the Bank for International Settlements — is also gaining attention. One insider described him as a contender who “ticks all the boxes.”
“Balancing representation among Europe’s member states on the ECB board is a highly complex task,” said Jens Eisenschmidt, Morgan Stanley’s chief Europe economist and a former ECB researcher.
Balancing Power and Representation
An unwritten rule prevents any single country from holding two board seats, meaning each nomination must consider both national balance and monetary policy orientation.
The eastern and Baltic states, which joined the Eurozone after 2007, are now demanding representation — with Latvia openly campaigning for a seat.
Among early declared candidates:
- Olli Rehn, governor of the Bank of Finland and former EU commissioner, backed by Helsinki.
- Boris Vujčić, governor of the Croatian National Bank, expected to be nominated by Zagreb.
Rehn is viewed as a dovish economist, warning of risks from inflation undershooting the ECB’s 2% target.
Gender and Diversity Pressures
The ECB has long faced criticism for its male-dominated leadership — only 19% of its 26 past board members have been women.
“France, as well as the European Parliament, will particularly stress the gender issue,” said one person close to the debate.
Prominent female economists expected to be considered for future board seats include:
- Agnès Bénassy-Quéré, deputy governor of the Bank of France,
- Christina Papaconstantinou, deputy governor of the Bank of Greece,
- Former OECD chief economist Laurence Boone, and
- Hélène Rey, professor at the London Business School.
Lagarde’s Legacy and Endorsements
Lagarde, who has dismissed rumors of leaving early, offered rare public praise for Klaas Knot in an interview last month.
“He has the intellect, the stamina, and the ability to include people — a rare and necessary skill,” she said, calling him a strong potential successor but “not the only one.”
Knot, once considered hawkish during the Eurozone debt crisis, has since adopted a more pragmatic stance. He supported Mario Draghi’s “whatever it takes” approach to saving the euro and advocated for the ECB’s Transmission Protection Instrument — a backstop against bond market instability.
Still, some southern European policymakers remain wary of his past opposition to ultra-loose monetary policy.
Germany’s Challenge and Nagel’s Bid
Bundesbank chief Joachim Nagel has quietly begun lobbying for Berlin’s support in his bid for the presidency.
Seen as a “political animal” within central banking circles, Nagel is respected for his diplomatic approach and centrist views. Under his leadership, the Bundesbank has shifted away from its traditionally rigid monetary stance.
But his candidacy faces a significant hurdle: Germany’s dominance across EU institutions.
Germans already hold top roles at the European Commission (Ursula von der Leyen), the Single Supervisory Mechanism (Claudia Buch), and the European Securities and Markets Authority (Verena Ross) — making it politically sensitive for another German to claim the ECB presidency.
Moreover, insiders say German Chancellor Friedrich Merz may not prioritize the role, as securing it would require major concessions elsewhere.
Spain’s Bid for Representation
Spain, like Germany, has never held the ECB presidency — despite being one of the Eurozone’s largest economies. With strong economic growth and de Guindos’s imminent departure, Madrid sees a window of opportunity.
Hernández de Cos, Spain’s potential candidate, is widely regarded as a pragmatic policymaker with deep academic credentials. His track record as governor and now BIS executive positions him as a unifying figure between northern and southern Europe.
Political Complications Ahead
The selection process for ECB leaders is notoriously political, often intertwined with EU power-sharing deals.
A potential far-right victory in France’s 2027 presidential election could complicate negotiations further, reshaping alliances within the Eurozone.
“Unfortunately, qualifications are not always the decisive factor,” said one veteran central banker.
As the Lagarde era enters its final stretch, the contest for control of Europe’s most powerful financial institution will test the delicate balance between national interests, gender equity, and economic ideology — setting the tone for the ECB’s next chapter in an increasingly volatile global economy.
