No phones, no leaks: How Lagarde is making her mark on ECB | The Business Standard
Skip to main content
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
The Business Standard

Monday
December 04, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
MONDAY, DECEMBER 04, 2023
No phones, no leaks: How Lagarde is making her mark on ECB

World+Biz

Reuters
10 February, 2020, 10:00 pm
Last modified: 10 February, 2020, 10:01 pm

Related News

  • Lagarde leads chorus warning that inflation must be anchored
  • Euro zone facing slower growth, higher inflation: ECB's Lagarde
  • Warning of slump ahead, Lagarde urges EU to agree recovery deal
  • EU leaders choose France's Lagarde for ECB after marathon summit

No phones, no leaks: How Lagarde is making her mark on ECB

Lagarde pledged to spend more time listening, and not to front-run decisions before policymakers had weighed in, as her predecessor Mario Draghi was often accused of doing

Reuters
10 February, 2020, 10:00 pm
Last modified: 10 February, 2020, 10:01 pm
FILE PHOTO: New European Central Bank (ECB) President Christine Lagarde addresses a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, December 12, 2019. REUTERS/Ralph Orlowski//File Photo
FILE PHOTO: New European Central Bank (ECB) President Christine Lagarde addresses a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, December 12, 2019. REUTERS/Ralph Orlowski//File Photo

Gathered in a German mountain castle last November for an evening retreat that ended with a whiskey-tasting, rebel European Central Bank (ECB) policymakers and Christine Lagarde, their newly confirmed president, made a pact.  

Lagarde pledged to spend more time listening, and not to front-run decisions before policymakers had weighed in, as her predecessor Mario Draghi was often accused of doing.

In return, she asked for discipline from the Governing Council, the ECB's top policymaking body, which comprises national central bank chiefs from the 19 euro zone countries and six Executive Board members, including Lagarde herself.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

Governors had to stop trashing policy decisions once taken and keep internal disputes out of the media, presenting a common external front, 11 sources — both critics and supporters of the ECB's last, controversial stimulus package — told Reuters.

A look at her first three months in office suggests Lagarde is using the entente of Schlosshotel Kronberg to make subtle but significant changes at Europe's most powerful institution.

"The change is cultural but quite profound," one of the sources, who asked not to be named, told Reuters. "Culture drives how we make decisions so it impacts policy."

A greater emphasis on consensus has boosted the Governing Council's role and given more voice to critics like Germany whose support may be vital whenever the next downturn comes, most of the sources, all with direct knowledge of the inner workings of the ECB, said.

But Lagarde has also made clear that Draghi's disputed September stimulus package will not be revisited, and has kept on his key aides, architects of the plan.

In Europe, the role of ECB president is uniquely powerful: backed by the Governing Council, she or he is the face and voice of the institution, carrying its message to businesses and households and to world leaders.

The ECB and Lagarde declined to comment. Draghi did not respond to a request for comment.

DISSENTERS

Meetings now start several hours earlier, leaving more time for deliberation and giving policymakers time to speak. Lagarde mostly presides over the debate, many of sources said, talking relatively little herself and keeping her own views quiet to foster open debate.

"When governors talk, she listens. That doesn't sound like a big deal but Mario was often on his phone or iPad," a second source said. "Madame Lagarde tells people to put their phones away."

Meeting proposals are now handed to governors up to a week in advance, some of the sources added, not just hours before for fear of leaks.

These changes have shifted power away from the close circle of advisers that Draghi relied on and given Governing Council members more capacity to shape the debate, reducing the need to bring disagreements into the open.

All of the sources said they consider Draghi — known as 'the man who saved the euro' — a superb central banker. But his willingness to forego consensus — as in September, when he pushed through the new stimulus package despite strong opposition — annoyed some policymakers, prompting open dissent.

In another sign the peace is holding, Governing Council members have largely accepted Lagarde's request not to publicly discuss the substance of the ECB's wide-ranging policy review.

Colleagues said Lagarde's charm and approachability contrasted with the more aloof Draghi. She takes the staff elevators inside the ECB tower, asks people's names and happily chats to colleagues.

But the former French finance minister is a ruthless timekeeper, keeping meetings on schedule and often reminding people to keep their messages short and to the point.

"In one (European Systemic Risk Board) meeting, when a speaker ran out of time and pleaded for leniency, she said sorry, we need to move on, and that was it," a third source said.

POLITICALLY SAVVY

What didn't change is also significant.

ECB Chief Economist Philip Lane continues to lead policy discussions, given the necessary space by Lagarde, a former International Monetary Fund chief and a lawyer by training who lacks the monetary policy expertise of her predecessors.

"Christine knows her limitations on monetary policy and knows that she needs to preside over the debate and not dominate it," a fourth source said. "She is more presidential."

Former colleagues at the IMF describe her as a tough negotiator whose strength was consensus-building.

Regarded as more politically adept than Draghi, Lagarde is said to be on cordial terms with European Commission chief Ursula von der Leyen and German Chancellor Angela Merkel. Their support could be vital as the ECB's depleted policy arsenal puts the onus on governments to drive growth.

In her first speech in charge, Lagarde praised German ex-finance minister Wolfgang Schaeuble, a stern ECB critic.

"They listened to Draghi during the crisis but not so much when things were going well," a fifth source said. "She's on friendly terms with von der Leyen and essentially has an open line to her. Mario never had this with (former Commission chiefs) Barosso or Juncker."

"The number of phone calls did not suddenly increase" between Lagarde and Merkel, a separate source in Berlin said, although the two have known each other for over a decade and have their conservative politics in common.

The strategic review Lagarde launched last month could be transformational for the ECB, bringing tweaks to the "below but close to 2 percent" inflation target and more tolerance for deviation, although at the risk of irritating the hawkish Germans.

But her desire for the ECB to take a bigger role in fighting climate change could bring early challenges to Lagarde, who joked in a meeting last year that Draghi "left big shoes to fill ... but I have high heels".

Top News

Christine Lagarde

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • For the first time, Bangladesh seeks foreign loans to support Rohingyas
    For the first time, Bangladesh seeks foreign loans to support Rohingyas
  • Treasury bill interest rate tops 11%
    Treasury bill interest rate tops 11%
  • File Photo of Prime Minister Sheikh Hasina
    PM to hold meeting with leaders of 14-party alliance tomorrow

MOST VIEWED

  • Representative image
    5.5 magnitude earthquake jolts Dhaka, parts of country
  • Cox's Bazar Express started its first journey from Cox's Bazar to Dhaka at 12:40pm on Friday (1 December). Photo: Nupa Alam
    Man crushed by Cox's Bazar Express on debut journey
  • Representative image
    BCS admin cadres' organisation forays into luxury hotel business
  • Will Bangladeshi garment exporters be able to meet EU's upcoming standards?
    Will Bangladeshi garment exporters be able to meet EU's upcoming standards?
  • 5 renewable power projects on cards to counter global fuel price surge
    5 renewable power projects on cards to counter global fuel price surge
  • Collage of the Android Earthquake Alerts System screenshots posted on the social media on Saturday, 2 December 2023
    Here’s how your Android phone alerts you of an earthquake

Related News

  • Lagarde leads chorus warning that inflation must be anchored
  • Euro zone facing slower growth, higher inflation: ECB's Lagarde
  • Warning of slump ahead, Lagarde urges EU to agree recovery deal
  • EU leaders choose France's Lagarde for ECB after marathon summit

Features

Designed for utility, the D90 is a giant in comparison to other MG models and misses out on design elements which gives the other models their sporty stance. Photo: Akif Hamid

Maxus D90: Spacious, capable and practical

11h | Wheels
Maria Callas: Remembering the soprano diva on her century

Maria Callas: Remembering the soprano diva on her century

10h | Features
Photo: Touseful Islam

Last sip of coffee with cats: Bidding adieu to Capawcino

12h | Features
Jannatul Ferdous Ivy has written 11 books so far with the latest, a series of poems, being published this year. Photo: Noor-A-Alam

Jannatul Ferdous Ivy: Overcoming tragedy, excelling in life

20h | Panorama

More Videos from TBS

Euro champion Italy in 'Group of Death' with Spain and Croatia

Euro champion Italy in 'Group of Death' with Spain and Croatia

7h | TBS SPORTS
Will Israel kill expatriate Hamas leaders after the war?

Will Israel kill expatriate Hamas leaders after the war?

6h | TBS World
Mahiya Mahi, Dolly Sayantani and Hero Alam's candidacy canceled!

Mahiya Mahi, Dolly Sayantani and Hero Alam's candidacy canceled!

10h | TBS Stories
Doctors of bike engines

Doctors of bike engines

8h | TBS Stories
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net