September 22, 2023

European Central Bank Picks Belgian as Top Economist

Mr. Praet, a former economist at the International Monetary Fund who has been a member of the central bank’s executive board since June, will succeed Jürgen Stark as head of the economics department. Mr. Stark resigned at the end of 2011 because he had opposed the bank’s intervention in sovereign bond markets.

The appointment of Mr. Praet, 62, is part of a significant shift in top management at the central bank that could lead to a slightly less hard-line approach by the institution with the most direct control over the fate of the euro.

Jörg Asmussen, a former top-ranking official in the German Finance Ministry, moved to the central bank effective Jan. 1. Benoît Coeuré, former deputy director general of the French Treasury, also joined the six-member executive board at the beginning of the month, succeeding Lorenzo Bini Smaghi of Italy.

Both Mr. Asmussen, 45, and Mr. Coeuré, 42, were said to have coveted the economics portfolio, and the choice of Mr. Praet appears to have been a compromise. A spokesman for the German Bundesbank declined to comment on the appointment.

The head of the economics department briefs the bank’s governing council on the state of the euro zone economy. That person can play an important role in setting monetary policy. Before the tenure of Mr. Stark in the economics department, it was overseen by Otmar Issing, a forceful personality who played a crucial role in ensuring that the bank focused on fighting inflation above all else.

The views of Mr. Praet, the former executive director of the National Bank of Belgium, are not well known, but he is unlikely to be as militant on inflation as his predecessors.

In any case, the economics position is not as influential as it once was, said Marie Diron, a former central bank staff economist who now advises the consulting firm Ernst Young.

In part that is because the governing council, which includes chiefs of national central banks, has a number of other members with economics degrees — not least Mario Draghi, who took over as president in November. Mr. Draghi has a doctorate in economics from the Massachusetts Institute of Technology.

The chief economist “is less powerful and less determinant than he might have been five years ago,” Ms. Diron said. “The president and other members are able to really provide quite deep economic insights, and there is not so much reliance on the chief economist.”

Mr. Asmussen’s portfolio will include responsibility for the central bank’s relations with European governments. He played a similar role at the German Finance Ministry and has been a main figure in negotiations on how to deal with the sovereign debt crisis. Mr. Coeuré will be responsible for market operations, which include interventions in bond markets.

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