ECON MEPs back Lagarde for ECB chief

The full house will vote on her appointment this month

Photo: EP Christine Lagarde

For combining firm commitment to the mandate “with the agility to adapt as the world around us changes,” vowed Christine Lagarde - whose mandate as Managing Director of the International Monetary Fund expires this month - during her hearing on 4 September before the EP ECON Committee. The aim of the hearing was to assess her fitness for the European Central Bank (ECB) top position.

Later on the same day, ECON lawmakers gave green light on her appointment with a solid majority. Her candidacy got 37 votes in favour to 11 against, with 4 abstentions. The final decision on whether she will take the bank's helm will be made by the full house at the plenary session in Strasbourg, 16-19 September.

At the beginning of the hearing, Ludek Niedermayer, ECON vice-chair, who presided the meeting, announced that prior to the hearing Lagarde had sent her written replies to all 76 questions she received from the lawmakers before the hearing.

Regardless of the complexity of the questions, the former Minister of Economy and Finance of France replied smoothly and competently during the two and a half hours of grilling by the ECON MEPs.

MEPs wanted to know what her intentions for the next steps towards the completion of the Banking Union with a European Deposit Guarantee Scheme and a fiscal backstop, whether the ECB should prioritise its secondary objectives and better integrate also through a review of its monetary framework, and on the need to more effectively integrate fighting climate change into the bank's mandate.

Other questions sought her view on the need to safeguard the value of the euro and keep prices stable, on how the negative effects, such as extra low interest rates, stemming from the exceptional measures taken by the ECB, could be mitigated, especially through its quantitative easing programme, the need to review the ECB's code of conduct, the role of the euro as a reserve currency, and how the ECB's decisions can be better explained to the wide public.

Christine Lagarde expressed her view that it is time to review the ECB's monetary framework to address new challenges such as non-bank lending, fintech, crypto currencies, and climate change.

The ECB needs to listen to and understand markets, not be guided by markets, she stressed, adding that it also needs to listen to and understand the people. “Because a currency is after all a public good that belongs to the people. We can work hard at making sure that civil society representatives and people actually take ownership of what is currently regarded very highly by the people of the euro area: the euro.”

Completing the single market remains one of the most powerful tools we have to spread new technologies and raise productivity while also safeguarding consumers and protecting labour standards by avoiding or limiting the social dumping, she underlined.

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