Lagarde to head ECB - the right choice?
Debtor countries have every reason to be happy
Die Welt isn't happy at all with Lagarde's nomination:
“Like the current boss Mario Draghi she stands for a course that does more to benefit debtor than creditor countries. For years Lagarde has been pushing the German government to accumulate more debt. Since the distinguished Frenchwoman took over, this approach has become the norm in the once so conservative IMF. In the Greek crisis she pushed for debt relief - again very much to the anger of the German government. ... If Weidmann had been chosen to head the ECB he certainly wouldn't have introduced any radical policy changes. But even with only a gradual change the markets and governments would have understood that this ridiculous party will end sooner or later. Now the party will go on - until it goes out with a bang.”
Draghi's legacy in safe hands
The Financial Times also believes ECB policy will continue as before:
“She meets the most important test for a new ECB president: that she will safeguard her predecessor's legacy. Mario Draghi defeated market speculation that the euro might break up, and overhauled the central bank's arsenal to fit it out for a post-crisis era of stubbornly low rates. No one doubts Ms Lagarde, too, will do 'whatever it takes' in a crisis. She has done well at the IMF ... The ECB is not the IMF. Technical expertise matters more: in communicating with markets, in getting policy right, and crucially, in rallying other ECB policymakers behind the course she sets.”
Christine Lagarde certainly has a good background in crisis management, notes Rzeczpospolita.
“Lagarde, the world's third most influential woman according to Forbes, has racked up lots of experiences putting out fires in the crises in Greece and Cyprus. That could help her if the financial world - knock on wood - goes up in flames again. Unlike Mario Draghi, however, an experienced Central banker and professor of business economics, she will have to rely on experts to tell her the best means to douse the flames. The Eurozone might be a giant, but it only has one leg - the ECB. To make it an optimal currency area as described by Nobel laureate Robert Mundell, it lacks the crucial second leg: a budget that would help it avoid crises.”
Europe stands and falls with Lagarde
Lagarde holds the key to the success of the European project in her hands, economist Nicolas Goetzmann writes in Le Figaro:
“Lagarde's political clout will make it difficult for the Eurozone governments to put her under pressure. Her reputation and her eight-year mandate, which comes with considerable independence, will no doubt make her the face of Europe. That, however, is a double-edged sword, and it is precisely this uncertainty that is so interesting. Christine Lagarde could destroy the European Union if she makes wrong decisions, just as she can make it a viable, durable, high-performance project. The dice are still in the air.”