De-Nationalizing the ECB’s Executive Board

The European Central Bank’s chief economist, Otmar Issing, may not be scheduled to retire until May 2006. But behind the scenes, maneuvering and politicking over his replacement are already in full swing.

If current practices are maintained, the choice for this key post will be made on the basis of nationality, not merit. The only certainty about Mr. Issing’s successor at the present moment is that he or she will be a German.

This is because the big countries are acting as if they “own” seats on the Executive Board – that there is a “German chair”, a “Spanish chair”, an “Italian chair”, and so on. They are getting away with their power grab even though it goes against the Maastricht Treaty, which excludes nationality as a criterion for membership on the Executive Board.

The pattern has been all too obvious. First, there was the controversial appointment of the Spaniard Jose Manuel Gonzales-Paramo to replace his countryman Domingo Solans on the Executive Board in May 2004. In May of this year, Lorenzo Bini-Smaghi will replace another Italian, the retiring Tommaso Padoa-Schioppa.