Belgium surprised its European Union partners last month when it nominated Paul De Grauwe, a respected monetary economist, for an impending vacancy on the executive board of the ECB’s governing council. It was the first time that an EU country had put up a candidate who wasn,t a central banker or a bureaucrat. The man De Grauwe would replace in June , ECB vice president Christian Noyer , was a French Treasury director.
“We have pleaded for a long time for a balance between central bankers and people with other experience,” Didier Reynders, the Belgian finance minister, tells Institutional Investor. “The composition needs to be varied.”
Many analysts applaud the nomination, saying that academics or financiers would enliven the bank’s discussions and might prompt a less conservative policy.
The 55-year-old De Grauwe, who has taught at more than a dozen universities and been a visiting scholar at the Federal Reserve Board, the Bank of Japan and the International Monetary Fund, has the proper pedigree. But whether he will be approved is another matter. He has ruffled feathers by criticizing the ECB for using monetary targets and setting an unduly restrictive inflation target.
Still, his dovish stance could appeal to EU finance ministers, who are scheduled to choose a replacement this month. Yet even if De Grauwe lands the job, his academic colleagues concede that he could become marginalized by ECB hawks and end up like Princeton University professor Alan Blinder during his days on the Federal Open Market Committee: outspoken but lacking clout.
A better bet, say some ECB watchers, is Lucas Papademos, the former Bank of Greece governor and onetime Boston Fed economist, whose strong central bank credentials and academic background make him doubly attractive. As it happens, Papademos, who taught at Columbia University for nine years, and De Grauwe coedited a book of academic papers on the European Monetary System a decade ago. Other candidates may also emerge.
De Grauwe won,t comment on his chances or , for the time being , on ECB policy. But he does suggest, as a close observer of the bank, that “outsiders with other experience can enrich the analysis, the debate and the decision-making process inside the ECB.”
