FRANKFURT (Reuters) – A shrewd negotiator who has run the IMF however has little financial coverage expertise, Christine Lagarde will face the problem because the European Central Financial institution’s new chief of getting to revive the euro zone economic system with a largely depleted coverage arsenal.
FILE PHOTO – Worldwide Financial Fund Managing Director Christine Lagarde and Managing Director of the Girls’s Discussion board for the Financial system and Society Chiara Corazza arrive for the Girls’s Discussion board Americas, at Claustro de Sor Juana College in Mexico Metropolis, Mexico, Could 30, 2019. REUTERS/Carlos Jasso
As soon as France’s first girl finance minister, and head of the Worldwide Financial Fund since 2011, she is a robust advocate of feminine empowerment who has lengthy argued that extra ladies in banking and regulation would enhance monetary stability.
Lagarde has already appointed the IMF’s first feminine chief economist, Harvard College’s Gita Gopinath, and she or he can be sure to start out breaking down a gender barrier on the ECB – an establishment nonetheless dominated by males, regardless of having lengthy set equality as a precedence.
“Christine Lagarde will, along with her worldwide background and standing as the present managing director of the IMF, be an ideal president of the ECB,” Donald Tusk, the outgoing chairman of EU summits, mentioned on Tuesday.
Lagarde, who unreservedly rejected the suggestion of taking over the ECB job until just lately, referred to as the nomination to succeed Italy’s Mario Draghi from Nov. 1 an “honor” and mentioned she would quickly surrender her function on the IMF in the course of the nomination course of.
Whereas her affirmation might be prolonged, it’s more likely to be largely a formality so long as the euro zone’s largest member states – Germany, France and Italy – are in unity.
Lagarde, 63, has blamed the worldwide monetary disaster a decade in the past partially on testosterone-fueled greed, as soon as saying: “If it had been Lehman Sisters slightly than Lehman Brothers, the world may effectively look rather a lot totally different at present.”
Persistently ranked among the many high 10 strongest ladies by Forbes journal, she has rebuilt the IMF’s credibility following Greece’s 2010 bailout, which not solely bent the Fund’s personal guidelines however wanted to be adopted up with extra help over years.
A former synchronized swimmer, Lagarde presided over the IMF’s largest bailout, a $57 billion deal for Argentina final 12 months that was broadly credited with arresting rising market turbulence that risked derailing international development.
Lagarde’s speedy problem on the ECB could be to beat her shortcomings in financial policymaking, particularly because it seeks to rearm for a possible new stoop after years of utilizing unconventional coverage instruments to stimulate inflation and development.
A former antitrust lawyer with Baker McKenzie, the divorced mom of two grew to become French finance minister in 2007, then took over on the IMF when a intercourse scandal compelled her predecessor Dominique Strauss-Kahn to give up.
A non-economist main a serious central financial institution is uncommon, though U.S. Federal Reserve chairman Jay Powell can be a educated lawyer and spent a lot of his profession in personal fairness.
“The preliminary criticism is clear: no central financial institution expertise, not the top-notch economics schooling, one other former politician on the head of the ECB,” ING economist Carsten Brzeski mentioned. “Nevertheless, let’s not neglect the outdated saying ‘the king is lifeless, lengthy stay the king’”.
One other complication for Lagarde, a vegetarian with a eager sense for trend, could be her 2016 conviction on negligence prices over a state payout made in 2008 whereas she was finance minister. Whereas judges mentioned her failure to contest a 400 million euro state settlement led to a misuse of public funds, she escaped punishment and the IMF board reaffirmed her in her submit.
However Lagarde additionally has a world perspective that lots of her rivals for the ECB job lack.
She has spent a lot of this 12 months warning in regards to the international affect of the U.S.-China commerce conflict and vowed to take care of the IMF’s lending firepower — about $1 trillion — so it might backstop any state of affairs.
Extra reporting by David Lawder in Washington; Enhancing by Catherine Evans and Gareth Jones