ECB presidency race: Hernandez de Cos v Knot, and leaders want a deal before year-end

The appointment follows a set path. Finance ministers make a recommendation, the European Parliament holds a hearing with the candidate, and EU leaders take the final decision. On Monday, ministers reviewed the two candidacies and passed the matter to leaders, without making a recommendation of their own. Pierrakakis was due to discuss the next steps with the president of the European Council, Antonio Costa, the same day, and said that the best outcome would be a final decision before the end of the year. He added that the euro area was working to a tight deadline.

Officials described a contest that is also about balance between member states. The Dutch finance minister, Eelco Heinen, argued that the choice should be made on merit and not through political bargaining. Spain's economy minister, Carlos Cuerpo, said he was optimistic that Hernandez de Cos would be selected. Ireland, which holds the rotating presidency of the EU Council, has said it hoped for a decision by December, according to its finance minister, Simon Harris.

Three jobs, not one

Lagarde's departure is only one of three vacancies. Executive Board member Isabel Schnabel leaves in January 2027, and the chief economist, Philip Lane, leaves in May 2027. Pierrakakis suggested treating the three positions together at the leaders' level, saying it made sense to handle them at the same time.

Officials said the three jobs are likely to be negotiated as a package among France, Germany, Spain and the Netherlands. A package matters because the Executive Board has traditionally reflected the euro area's largest economies, and a president from one country can leave the others looking for the other posts. Those details are in officials' comments and have not been put on record by the Eurogroup.

The timetable to December

The next formal step is for leaders to take up the appointment, with the aim of reaching a deal in December. Before that, the candidates are expected to face questions in the European Parliament.

The choice has weight outside Europe. The ECB sets interest rates for 21 countries sharing the euro, and its president speaks for the currency in international forums. Markets will watch for signals of whether the next president would be closer to the central bank's more cautious wing or its more hawkish one, though neither candidate has set out a policy platform in the reports available. Hernandez de Cos has experience in international financial regulation through the Bank for International Settlements, while Knot has been a member of the Governing Council as a national central bank governor. For now, the decision rests with EU leaders, and the timetable is the main thing that has been fixed.

The post carries weight beyond the headline. The president chairs the Governing Council, which sets interest rates for the euro area, and leads the Executive Board that runs the bank day to day. The role is held for a single eight-year term that cannot be renewed, and the president speaks for the bank at its post-meeting press conferences and at international forums. The Governing Council is made up of the six members of the Executive Board and the governors of the national central banks of the euro-area countries, so the choice of president is also a signal about how far the bank will lean towards the views of its larger or smaller members. Both candidates bring central banking experience from countries with different traditions on inflation and public debt, which is part of why the bargaining over the three posts has been described as a package.
Lagarde took office on 1 November 2019, so an eight-year term would have run to 31 October 2027, and her early exit leaves the euro area to fill the post, and the two Executive Board seats that fall vacant soon after, within a few months. Officials say a decision in December would give the winner time to be heard by the European Parliament and to take up the post in February.