German woman with bank expertise front-runner to join ECB board

Mon Dec 16, 2013 8:59am EST
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By Sakari Suoninen and Eva Taylor

FRANKFURT (Reuters) - Sabine Lautenschlaeger, a German bank supervision expert with no monetary policy record, is an early favorite to replace Joerg Asmussen on the ECB's executive board after his decision to leave early to spend more time with his family.

Lautenschlaeger, 49, who was praised by German Finance Minister Wolfgang Schaeuble on Monday as a worthy candidate to replace Asmussen, is vice president of the Bundesbank and analysts said her appointment could herald a more united, hawkish German stance within the ECB's rate-setting council.

Asmussen acted as a balancing force in his two years at the European Central Bank, siding with President Mario Draghi in a dispute with the Bundesbank over bond-buying at the height of the euro crisis, but more recently opposing the Italian's push to cut interest rates.

"I would expect there to be a bit of a shift to a more hawkish side of decision-making, but it would not tip the balance from doves," said Elwin de Groot, an economist at Rabobank.

The ECB surprised with an interest rate cut in November which around a quarter of the 23-strong Governing Council spoke out against, with Bundesbank chief Jens Weidmann leading the opposition.

Lautenschlager's addition to that group will not alone be enough to tilt the balance.

A Reuters poll of economists last week found 25 of 40 said the ECB's next salvo will be to prime banks with more cheap cash, probably early next year.

Asmussen's departure, to take a less prestigious post as state secretary at the German labor ministry in Berlin, where his partner and two daughters live, is the third early exit by a prominent German central banker in as many years.   Continued...

Bundesbank Vice President Sabine Lautenschlaeger speaks during a news conference in Frankfurt November 14, 2012. REUTERS/Lisi Niesner