The lady disappears: Christine Lagarde may resign as ECB president

The president of the European Central Bank, Christine Lagarde, may resign in the near future, The Financial Times reported, citing its own sources. Her term of office expires in November 2027, but she should vacate a key position in the EU financial system much earlier. There is already a queue of officials from the largest central banks in Europe for her position. Why Lagarde is leaving, who can take her place and what her career at the ECB turned out to be — in the Izvestia article.

What are the results of Lagarde's work at the ECB?

Prior to her appointment as head of the ECB, Christine Lagarde worked as Managing Director of the International Monetary Fund. In November 2019, as a result of a deal between French President Emmanuel Macron and German Chancellor Angela Merkel, a "castling" took place - Lagarde was appointed ECB president, and then German Defense Minister Ursula von der Leyen headed the European Commission. Lagarde's leadership has become a time of "permanent crisis" for the eurozone. It had to deal with the coronavirus pandemic, the energy shock of 2022-2023, and the sharpest spike in inflation in the history of the single currency.

Under Lagarde, the ECB made a sharp U-turn in monetary policy: the base rate was raised from -0.5% to 4% in just a year. Critics often accused her of a lack of economic education (Lagarde is a lawyer by profession) and excessive politicization. Lagarde managed to bring inflation back to the 2% target, but economic growth remains extremely sluggish (1.3% is expected by the end of 2025).

Why is Lagarde leaving?

The main reason for Lagarde's likely departure is politics. According to insiders, she wants to leave Frankfurt before the French presidential election, scheduled for April 2026. This maneuver should give Emmanuel Macron and the new German Chancellor Friedrich Merz the opportunity to appoint a successor of a "systemic nature" before the political landscape of France can dramatically change. The most popular candidates for victory now are Marine Le Pen and Jordan Bardella, the leaders of the right-wing Eurosceptic National Assembly.

Lagarde, being a staunch supporter of European integration, seeks to insure the ECB against political turbulence. In addition, she herself has repeatedly hinted that she originally expected a five-year term (which has already expired), and not eight years. Early retirement will allow her to maintain her reputation as a "crisis manager", and possibly take up a post in another international structure, for example, to head the World Economic Forum. However, last June, she said during a press conference at the ECB: "I regret to inform you that you will not get rid of me so easily."

Who can replace you?

The shortlist of successors includes both "hawks" from Northern Europe and more moderate representatives from the South. Experts call Pablo Hernandez de Cos (former head of the Central Bank of Spain) and Claes Knot (head of the Central Bank of the Netherlands) the main favorites. De Cos is considered a compromise figure capable of balancing the interests of debtors in the south and creditors in the north, while Knot is a well—known disciplinarian whose arrival could alarm the Italian and Greek government bond markets.

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Within the ECB itself, Isabelle Schnabel, an influential member of the executive board, is running for the post of head. Her candidacy is logical from the point of view of succession, but her appointment would violate the unspoken Franco-German parity (if a German woman becomes head of the ECB with von der Leyen at the head of the European Commission). Bundesbank chief Joachim Nagel, whose authority in Germany is unshakeable, but whose hawkish stance may face resistance in Paris and Madrid, is also among the contenders.

Will the ECB's policy change as a result of the change of head?

A radical reversal should not be expected: the ECB is a huge bureaucratic machine, whose inertia is very high, and decisions are made collectively. By 2026, inflation had stabilized, and the regulator moved into a phase of slow rate cuts. Any new chairman will act within this fairway, trying to maintain at least modest economic growth, preventing prices from overheating again.

However, the person in the chair can determine the accents. If a representative of the northern bloc (Nagel or Knoth) takes over the post, the ECB will curtail bond purchase programs faster and demand tougher budgetary discipline from governments. If the "southern" candidate wins or Lagarde is replaced by another technocrat politician, the bank will be more inclined to "creative" methods of liquidity support in order to prevent the growth of spreads on the debts of troubled eurozone countries.

What does Lagarde's unexpected decision mean?

The ECB is a fairly quiet bureaucratic structure where such gestures were rare. The previous presidents (Wim Duisenberg, Jean-Claude Trichet, Mario Draghi) were waiting for the end of their terms of office. The expected resignation testifies to the deep politicization of the situation and an emergency decision. With the weak economic situation, the current, extremely unpopular leaders of the eurozone countries (the anti-ratings of Macron and Merz are breaking national records within their countries) are trying to protect a key position from eurosceptics. At the same time, such a maneuver could exacerbate the contradictions between the leaders of national governments and European institutions in the event of a victory for Le Pen or Bardella in the French elections, as well as similar successes for eurosceptics in other countries.

In addition, the rule was once again confirmed that European institutions are under the control of France and Germany, whose leaders determine almost all key appointments on the sidelines.