The battle hots up. Luxembourg has challenged Spain’s self-proclaimed right to a place in the European Central Bank’s top management team. The Grand Duchy on Friday announced it would nominate Yves Mersch, the country’s central bank governor, for the upcoming vacancy on the ECB’s six-man executive board.
As Money Supply reported earlier this week, Madrid has already nominated Antonio Sáinz de Vicuña, a Spanish ECB veteran who heads its legal department, to replace José Manuel González-Páramo, his compatriot , whose eight-year term on the executive board ends in May.
The contest may prove an unwelcome distraction as eurozone leaders seek to combat the region’s debt crisis. But this could be a battle fought at the highest level.
Nicolas Sarkozy, French president, has backed Madrid’s claim to keep a seat on the board in return for Spanish support for France’s push for a financial transactions tax. Moreover, Luxembourg and other northern European governments see important principles at stake. As the Financial Times reported on Friday, the Dutch government has signalled concern about the composition of the ECB executive board, half of which was chosen by southern European governments, which are are the heart of the crisis.
Slovenia has also proposed its own candidate, Mitja Gaspari, a former Slovenian central bank governor.
Luxembourg’s Mr Mersch, one of the eurozone’s longest serving and most experience central bankers, is no lightweight candidate – and would not have agreed to stand if he did not see a good chance of winning.
Nobody, perhaps, would dare to challenge France and Germany’s right to a seat on the ECB executive board. But with its weakened economy, Spain faces a fight on its hands.