Lagarde impresses ECON in bid for ECB top job

6 September 2019

The former head of the International Monetary Fund (IMF) Christine Lagarde was invited to a hearing in the Economic and Monetary Affairs Committee (ECON) in the European Parliament on Wednesday 4 September in her bid for the top job at the European Central Bank (ECB). During a two and a half-hour hearing with MEPs, Ms. Lagarde promised to make tackling climate change a macroeconomic priority at the ECB.

Facing a confirmation vote in the Parliament next month, Lagarde sat before the ECON Committee the same day that their Chair Roberto Gualtieri was nominated as Finance Minister in Italy. The growing importance of the ECON Committee was shown in the long list of reforms Lagarde promised MEPs.

On housing bubbles, Lagarde has promised to use the so-called “macro prudential instruments” of the ECB to stop bubbles in the housing market that inflates rent.

Regarding the emerging virtual currencies, Lagarde was unsure about Facebook’s new Libra currency, she said: “I believe stablecoins, whether they are the Libras of this world or central bank digital currencies, they have to be in compliance with all the rules and regulation that apply to the activity.”

Lagarde would follow the wave of monetary loosening which was brought in under former ECB head Mario Draghi. Next week, the European Central Bank could cut interest rates further into negative territory and restart its €2.6tn bond-buying programme.

During the hearing, Lagarde remained humble and moved away from using her previous role in the IMF to inflate her credentials for the top job. She focused on the need to communicate what the ECB does to the average person. During her tenure at the IMF, Lagarde asked all teams to stop using abbreviations to make the work more accessible.

MEPs were clearly satisfied with 37 votes in her favour, 11 against and 4 abstentions. The vote was by secret ballot.