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The ECB’s Changing of the Guard

After steering the eurozone through a decade of crises, the top leaders of the European Central Bank are now on their way out. Their successors will face both similar and new challenges, and whether they confront them as effectively will depend on European national governments picking the right women and men for the job.

LONDON – This month, the European Central Bank hosted a colloquium in honor of Peter Praet, its departing chief economist. Having worked closely with ECB President Mario Draghi through the years after the 2008 financial crisis and subsequent euro crisis, Praet, more than anyone else, has been the one to steer the bank’s governing council toward a common decision in difficult situations. His departure comes after that of Vice President Vítor Constâncio last summer, and he will be followed out by Draghi in October and Benoit Coeuré of the ECB executive board in December.

These important changes in the ECB leadership offer a chance to reflect on the challenges the Bank will face in the coming years. As the eurozone’s only truly federal institution, the ECB has found itself acting as the “institution of last resort” during past crises, picking up the pieces when national governments fail to reach agreement. It has managed this despite its complex governance structure. The ECB governing council comprises 19 national central-bank governors, each representing countries with different interests, as well as the executive board, whose six members are appointed by the European Council following an intense bargaining process.

Though Draghi tends to get most of the attention, he made sure to point out at the colloquium that it was Praet whose recommendations have consistently been accepted by the governing council these past eight years. The departing leadership’s success in building a consensus within such a diverse group should not be taken for granted.

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