Madrid pushes De Cos for ECB presidency

Christine Lagarde's eight-year term as ECB president doesn't expire until October 2027. But the race to replace her is already being run in European capitals, and it started months ago.

Credible reports from Euronews in February indicated Lagarde may step down early, before French presidential elections in April 2027, giving Emmanuel Macron and German Chancellor Friedrich Merz a window to shape her succession while they still hold power. The ECB's response was carefully ambiguous: Lagarde "has not taken any decision regarding the end of her term." That is not a denial.

Two names dominate expert polls: Klaas Knot, president of the Dutch central bank, and Pablo Hernández de Cos, Spain's former central bank governor who now runs the BIS (the Bank for International Settlements, a coordinating body for the world's central banks). An OMFIF survey in April found them level-pegging. A Financial Times poll of economists placed them as joint favorites. The real contest, though, is between the capitals backing them.

Madrid's candidate, and the governor trying to sink him

Spain's campaign for De Cos has been messy. Pedro Sánchez was reluctant to back a man appointed by his predecessor Mariano Rajoy, someone whose Bank of Spain reports repeatedly criticized the government's fiscal record (El Debate). According to Vozpópuli, it took Carlos Cuerpo, the economy minister, weeks of internal lobbying to bring Sánchez around. The government has now closed ranks behind De Cos, but without any formal public endorsement, keeping things deliberately unofficial (Cinco Días).

The bigger problem comes from inside the house. José Luis Escrivá, the current Bank of Spain governor, is actively working against De Cos, speaking to journalists and fellow central bank governors across Europe to undermine the candidacy (El Debate). His motive is arithmetic: if De Cos gets the presidency, Spain can't also hold an Executive Board seat, and Escrivá's own ambitions die.

Berlin's quiet bet

Germany has its own candidate in the open. Isabel Schnabel, already on the ECB's Executive Board, told Reuters she would take the presidency "if asked" (WirtschaftsWoche). But her aggressive hawkishness, pushing for rate hikes even as growth weakens, makes her a hard sell for southern governments carrying high debt.

In May, Econostream assessed that Germany views Knot as the "optimal fallback," calling him "stability-oriented, deeply experienced, fiscally serious." This fits Merz's ordoliberal instincts perfectly, meaning Germany's strict focus on rule-based discipline and price stability above all else.

France appears to have conceded. Villeroy de Galhau resigned early as Banque de France governor, replaced by Emmanuel Moulin, a Macron loyalist who barely survived parliamentary confirmation (Le Monde). No French candidate for the ECB presidency has emerged. After two French presidents (Trichet, then Lagarde), Paris seems ready to accept it's someone else's turn.

What the choice shapes

The ECB president shapes consensus on interest rates and decides when to activate the TPI (the Transmission Protection Instrument, which lets the ECB buy government bonds to prevent borrowing-cost spikes in countries like Italy or Greece). Italy's spread over Germany, the gap between what each country pays to borrow, sits at a 15-year low of around 73-76 basis points. That calm depends partly on markets believing the TPI backstop remains credible.

De Cos, classified by analysts as a centrist who leans dovish (favoring lower rates to support growth), has consistently backed the TPI and gradual rate adjustments throughout his career (BIS). Knot, once one of the ECB's most vocal hawks, has softened his stance in recent years, but his instinct still runs toward tighter policy.

Formally, the European Council decides by qualified majority after consulting the European Parliament and the ECB's Governing Council (Consilium). In practice, every past ECB presidency has been settled through package deals trading top EU posts across countries. Nationality always outweighs ideology.

Spain has never held the ECB presidency. And since Luis de Guindos departed the Executive Board on May 31, Madrid has no representation there at all. That argument carries weight. The decision will hinge on which capital cuts the better deal, and whether Madrid can stop its own governor from sabotaging the bid before it gets there.