Why Early Departures Weaken the ECB
Speculation over a possible early exit by Christine Lagarde highlights how shortened mandates risk politicising succession and eroding the substance of central bank independence. A commentary by Ignazio Angeloni
Reports in the European press suggest that the president of the European Central Bank may step down before the end of her mandate in October 2027. The conjecture is that domestic political considerations in a large member state could shape the timing of the succession. The conditional is unavoidable: these are rumours, with no clear sourcing and no official confirmation.
Yet the episode, real or not, points to a structural issue that goes beyond personalities. Do the length and certainty of a central banker’s mandate matter? Or are they procedural details of limited consequence?
Early departures from the ECB’s executive board are not unprecedented. The reasons have varied and are seldom spelled out. In some instances, differences over the stance of monetary policy have been cited as background factors. That is an unconvincing justification. The ECB’s statute — embedded in EU primary law — does not require unanimity of views. It requires recognised standing and professional experience in monetary or banking matters. Among individuals of high competence, divergence of analysis is a strength, not a defect. A deliberative body gains credibility from open disagreement resolved through institutional process.
In other cases, changes in the board’s composition have been associated with efforts to recalibrate the balance of nationalities. That argument is weaker still. Professional stature is not a function of passport. The euro area’s credibility rests on the perception that appointments are meritocratic and insulated from geopolitical bargaining. To treat seats as national allocations risks eroding that perception.
There have also been episodes in which roles were effectively exchanged with national institutions, absent either policy disagreement or representational imbalance. Such manoeuvres may be legally permissible, but they blur the line between European office and domestic political calculus.
The ECB statute is explicit about independence: members of its decision-making bodies shall neither seek nor take instructions from governments or other bodies. But formal independence is only the starting point. Influence in advanced democracies is rarely exerted through explicit commands. It operates through expectations, timing and career incentives.
Here the certainty of tenure becomes central. A “strategic” management of exit — whether encouraged by political actors or contemplated by the office-holder — opens the door to two distortions. First, it allows incumbent governments to shape succession according to partisan preferences. Second, it may create incentives for the central banker to view the role as a stepping stone, calibrating decisions or visibility with an eye to subsequent appointments.
Lengthy, non-renewable mandates in central banking are therefore not ceremonial. They are designed to anchor attention on a single objective — price stability — over a horizon that exceeds electoral cycles. Monetary policy works with long and variable lags; credibility accumulates slowly and can dissipate quickly. A secure tenure reduces distractions and mitigates the subtle forms of influence that accompany uncertainty about departure.
One practical improvement would be to require candidates for the ECB’s executive board and supervisory board to state, at the time of nomination, their intention to serve the full term unless prevented by objective circumstances — such as incapacity. Such a declaration would not be legally binding. Its force would be reputational. Compliance could be reinforced by structuring exit conditions — determined by the institution itself — in a way that rewards completion of the mandate.
Similar considerations apply, albeit with greater complexity, to national central bank governors who sit on the ECB’s governing council and supervisory board. They exercise a European mandate, with equal voting rights and the same duty of independence, yet are appointed under national legal frameworks and political conventions. This creates an inherent tension: holders of a European office are selected without any formal European-level scrutiny. The inconsistency is difficult to eliminate, but it should not be ignored.
The stability of a central bank’s leadership is not a procedural nicety. It is a core institutional safeguard. In a period of heightened geopolitical and fiscal pressures, preserving not only the letter but also the spirit of central bank independence is essential to the euro area’s credibility.
A previous version of this article was published by Il Foglio
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
