Perhaps the most insightful piece currently out there discussing the probable impact of Christine Lagarde as potential new ECB president. Brooking’s Senior Fellow Douglas Rediker argues that at the IMF, Lagarde turned morale around after Dominique Strauss-Kahn’s unstable tenure. She elevated the IMF to the centre of the global policy nexus by leading G20 summits. She also wasn’t afraid to take on politically sensitive topics like corruption, the elimination of which she introduced as a central target for the IMF. Should she become ECB President, she will be faced with weak Euro-area growth and will additionally need to tackle financial stability issues (e.g. weak banks). Much of this role will be political in nature, which suggests she is well placed to take on the role.
Why does this matter? Running the ECB is a complex and political role, which Lagarde seems well qualified to take on. This reduces the chances of a policy error. The podcast didn’t discuss this directly, but Lagarde could also help the process of the EU asserting its global power along with the US and China.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
For access to our Slack Chat Room, where we discuss all things markets with our researchers and subscribers