With such demands, though, comes great influence. Those in need of convincing need only cast their minds back to July 2012. Greek interest rates were soaring and investors were entertaining the possibility that the euro zone would break up. But Mario Draghi, the ECB’s boss, soothed markets with a promise to do “whatever it takes” to save the euro. Six years on, that commitment still helps to contain Italy’s sovereign-bond yields, despite unease about its new government’s economic policies.
Mr Draghi’s term does not end until October 2019. But the jostling to replace him has already started. His successor will be chosen after much horse-trading between the 19 euro-zone members. By comparison, last year’s choice of Jerome Powell to lead America’s Federal Reserve looks a breeze.
Political jockeying has been a feature of the ECB’s presidency ever since it was set up 20 years ago. Its mandate followed that of the German Bundesbank in enshrining price stability and independence. Even so the Germans, doubtful of southerners’ commitment to low inflation, insisted on Wim Duisenberg, a Dutchman they saw as a kindred spirit, as president. The French wanted one of their own. The fudge was that Mr Duisenberg would step down halfway through his term to make way for Jean-Claude Trichet, a Frenchman who was Mr Draghi’s predecessor.
Complicating the negotiations over the next presidency is the fact that other big jobs are at stake, too. Vacancies at the top of the European Commission and European Council will also open up next year. And there are other spots at the bank that need filling. This week it began its search for a chief bank supervisor to replace Danièle Nouy, a Frenchwoman. Peter Praet, a Belgian member of the bank’s executive board, will leave in May.
Member states need to decide which roles they want and what to concede to get them. At the ECB, a balance between northerners and southerners is considered essential. The choice in March of Luis de Guindos, a Spaniard, as its vice-president, for example, is thought to leave the field open for a northern president.
With the euro area’s largest and most populous economy yet to hold the post, most observers agree that it is Germany’s turn. The obvious candidate would be the boss of the Bundesbank, Jens Weidmann. A survey last month of economists by Bloomberg, a news agency, put him as the most likely choice.
But the job is not in the bag. An advocate of a minimalist role for the ECB, Mr Weidmann has often been in the dissenting minority on big policy decisions. In 2013 he testified in Germany’s constitutional court against the bond-purchase scheme that gave substance to Mr Draghi’s promise to save the euro. Some reckon he has toned down his criticism of the bank recently, perhaps to position himself for the top job. Even so, he is unlikely to have many southern European supporters. Insiders also wonder if he is too orthodox to dream up unconventional solutions in a crisis.
Angela Merkel, Germany’s chancellor, could probably ensure his elevation. But other countries’ leaders would demand big concessions in return. And she may not, after the past difficult decade, see much to gain from having a German at the bank’s helm. Teutonic zeal for price stability and fiscal discipline has not been popular in crisis-stricken countries. It might be safer to back a candidate from another northern European country, who shares German views but is less divisive.
Erkki Liikanen, the boss of Finland’s central bank, is moderately hawkish and seen in Frankfurt as a constructive contributor to policy debates. Though he is 67 and stepped down from the Bank of Finland this month, he has reportedly said that he would consider the ECB role. His successor, Olli Rehn, could also be in the running, as could Klass Knot, the boss of the Dutch National Bank. Philip Lane, who heads Ireland’s central bank and has an impressive academic background, is widely considered the front-runner to replace Mr Praet.
The twists and turns of backroom deals mean that a “grand bargain” between Germany and France encompassing other top EU jobs could yet put a Frenchman at the top again. François Villeroy de Galhau, the governor of France’s central bank, is thought to have good relations with Emmanuel Macron, the president. Another runner could be Benoît Coeuré, who is already on the ECB’s board. Though he is well-regarded, his promotion would depend on lawyers finding a way round rules that seem to ban repeat terms.
A surprise cannot be ruled out. Mr Draghi, an Italian, was appointed after a German, Axel Weber, dropped out of the race; he was chosen even though another southerner, Vítor Constâncio, was vice-president. But the risk is that the successful candidate is the least objectionable, rather than the ablest. That would damage the ECB’s hard-won credibility.
The fallout from such an intensely political selection process could start to be felt even before Mr Draghi departs. As asset purchases wind down, the ECB’s main policy tool is its guidance on interest rates. It expects rates to stay unchanged “at least through the summer of 2019”. But uncertainty over Mr Draghi’s successor could undermine that guidance, says Huw Pill of Goldman Sachs, an investment bank. It could even shake confidence in the bank’s willingness to act in another crisis. As the euro zone’s leaders gear up for the horse-trading, they would do well to consider the impact on the markets.