BERLIN (Reuters) - Germany nominated university professor Isabel Schnabel to the European Central Bank’s executive board on Wednesday, giving Berlin an expert voice on the bank’s top decision-making body and a possible bridge-builder in a time of deep divisions.
The decision by the German cabinet was expected after a source told Reuters on Tuesday that Finance Minister Olaf Scholz had chosen Schnabel to replace Sabine Lautenschlaeger, another German, who resigned from the ECB board last month after unsuccessfully opposing more ECB stimulus.
Scholz confirmed Schnabel’s nomination on Wednesday and lauded her as a very good candidate for the ECB job.
“She is an outstanding economist and proven expert in banking and monetary policy issues. She will convince my colleagues in Europe and do a good job in the ECB for the euro zone and for our country,” Scholz said.
A member of the German Council of Economic Experts, the country’s “wise men”, since 2014, the 48-year-old Schnabel is considered a well-connected economic expert and skilled communicator.
While Lautenschlaeger was a top bank supervisor, she lacked expertise in monetary policy, and her critics said she was not a powerful enough voice to defend German interests against more stimulus.
“I am honoured to have been nominated by the German Federal Government to become Executive Director of the European Central Bank,” Schnabel said on Twitter. “If my appointment is approved by the European bodies, I will do my best to meet the high expectations set in me.”
Schnabel has argued that the ECB’s most recent stimulus package was excessive, but within the mandate of the central bank.
With Bundesbank chief Jens Weidmann openly criticising the ECB decision, Schnabel also defended the central bank, warning that too much criticism could undermine trust in the ECB.
“It’s dangerous that politicians, journalists and bankers reinforce the narrative that the ECB steals the money of German savers,” Schnabel told the German newspaper Handelsblatt last month. “The ECB, one of the most important European institutions, is constantly being made a scapegoat in Germany.”
The nomination of Schnabel could change Germany’s influence on the ECB in a more constructive way - especially if incoming ECB President Christine Lagarde should give her a new portfolio when restructuring responsibilities among board members.
“With Schnabel, Germany would have an excellent economist on the Board, who has been rather supportive of the ECB’s monetary policy decisions of the last years,” ING analyst Carsten Brzeski said.
Ireland’s Philip Lane is expected to remain the ECB’s chief economist, but Schnabel could still get a portfolio more economically oriented than Lautenschlaeger, which would give her more influence on monetary policy decisions.
“Schnabel could also emerge as a Lagarde whisperer, giving Germany a much better and much more constructive influence on ECB decisions than the traditional ‘nein’,” Brzeski said.
Lautenschlaeger will leave the ECB board on Oct. 31, but European officials are unlikely to approve her replacement before December, indicating that Schnabel could take up her new role in late December or early January.
Reporting by Christian Kraemer and Michael Nienaber; editing by Larry King