Lagarde charms EU lawmakers as she heads for ECB presidency
Christine Lagarde is headed for the top job at the European Central Bank despite staying virtually silent on her plans for the blocs monetary policies.
The current International Monetary Fund boss successfully weathered a hearing with the European Parliaments committee on economic and monetary affairs (ECON) on Wednesday in Brussels, as she bids to succeed ECB President Mario Draghi on November 1.
Pledging to prioritize climate change and public communication of eurozone policies as ECB president, it was the 63-year-olds political acumen that won over lawmakers as they assessed her for a job typically reserved for male economists in gray suits.
But in the near three-hour hearing, Lagarde avoided talking specifics on monetary policy: dancing around questions on how monetary stimulus had inflated house prices and how record low interest rates are hurting pensioners and savers.
As the committee prepared to deliver its non-binding approval of Lagarde Wednesday night, ahead of a plenary vote in Strasbourg the week of September 16, MEPs focused in particular on her environmental commitments — and her gender — in offering their support.
“Christine Lagarde performed well in todays hearing,” Eero Heinäluoma, an MEP for Finlands Social Democratic Party, tweeted after Lagardes hearing. “Readiness to think about new measures for growth. Taking the environment into account at the ECB.”
“The IMF under Ms Lagardes leadership has toyed with several unorthodox ideas over the years” — MEP Markus Ferber
“It is a good sign that a powerful woman applies for that job and that this institution could be led by a woman for the first time,” Sven Giegold, a Green MEP, said.
Lawmakers failed to follow up on major concerns raised ahead of the hearing about Lagardes lack of experience as an economist.
“The IMF under Ms Lagardes leadership has toyed with several unorthodox ideas over the years,” said German conservative MEP Markus Ferber on Wednesday morning. “The era of ultra-easy monetary policy will have to stop at some point and Ms. Lagarde is the one who will have to manage that process.”
EU leaders will take the final decision on Lagardes appointment when they meet in Brussels in October.
Vague on the details
Lagardes hearing fell as the eurozones central bank governors prepare to meet next week in Frankfurt. Market analysts expect the ECB to unveil more controversial stimulus measures to counter growing economic uncertainty, stemming from Brexit, global trade tensions and a slowdown in growth.
The Frenchwoman said she plans to ditch the jargon from ECB speeches and make monetary policy easier to understand.
Parliamentarians pushed Lagarde to venture into the world of monetary policy, which she has little experience in. Lagarde, who comes from a legal background, in response stressed the need for “cross-benefit analysis” of past and present policies at the ECB before she would provide her judgment.
A similar tactic was used when asked about future actions she might take as ECB president, although she acknowledged ECB policies should be open for review. “A review of the monetary framework … but also in coordination with other central bank institutions from around the world, is warranted given the circumstances,” she said.
The IMF boss instead offered her support for the ECBs easy money programs, which Draghi has employed during his eight-year tenure to keep the eurozones economy on an even keel.
Lagarde also promised to simplify the language of banking for ordinary people: a move likely to appeal to European parliamentarians, but worsen concerns among ECB-watchers about her lack of expertise.
The Frenchwoman said she plans to ditch the jargon from ECB speeches and make monetary policy easier to understand. Better communication of the banks goals would help people understand if there is “downside first, and benefits later on” to decisions by bankers, she said.
Climate was prominent in MEPs questions from the Greens and the Parliaments liberal political group, Renew Europe, which pushed Lagarde on her plans to make monetary policy greener.
Central bank governors should be careful to damn new technologies too quickly, Lagarde said.
Lagarde grabbed the opportunity.
“Any institution has to have climate change risks and protection of the environment at the core of their mission,” she said, while cautioning that “things cant change overnight.”
Green-minded lawmakers have attacked the ECB in the past for buying up “brown” bonds from companies that carry heavy carbon footprints, like coal companies, as part of its easy money programs. Draghi defended tRead More – Source