Christine Lagarde Takes Over at the European Central Bank
When Christine Lagarde, the long-time head of the International Monetary Fund, shifts to the European Central Bank on Nov. 1, one could see in which as a demotion. The ECB has fewer member states, fewer issues where in which has an important say along with much less glamour. Plus, her fresh job requires her to move coming from Washington D.C. to Frankfurt. Why is usually she doing in which?
When she’s sitting with her perfect posture in front of you in one of the myriad offices at IMF headquarters — in which beaming smile on her face, the perfectly coiffed hair along with permanent vacation tan — in which’s a question in which seems almost too petty to actually ask.
nevertheless she is usually happy to answer anyway. “First of all,” Lagarde says, along with her indulgence doesn’t seem forced inside the least, “I was asked, along with there are things in which sometimes you don’t refuse in life when they ask.”
She looks a bit bemused by her own answer, nevertheless goes on to say in which she is usually today looking forward to learning German along with has already hired a tutor. Furthermore, she has rented an apartment not far coming from the Botanical Garden along with says she has been given a cookbook full of recipes for Frankfurt specialties. along with, she says, she even knows what Frankfurt Green Sauce is usually.
Sometimes when she goes to parties, Lagarde says, she is usually asked why she’s there. Her response is usually always: “Well, because I was invited.”
Did she genuinely just say “party?”
A Defeat in Victory
There is usually hardly anything in which Lagarde isn’t able to sugarcoat. A lawyer by training, she is usually a virtuoso when in which comes to thinking positively — along with perhaps in which is usually exactly what Europe’s irreconcilable monetary policymakers, the vast majority of whom are men, actually need.
Six weeks ago, outgoing ECB President Mario Draghi pushed through a comprehensive program to further loosen his already loose monetary policy. in which was a victory in which was, in reality, a defeat. More than a third of Governing Council members were opposed to his plan, including not just German central bank head Jens Weidmann, who is usually well-known for his frequent resistance to Draghi’s policy, nevertheless also the relevant expert panels along with the French ECB representative, who had always been seen as a loyal Draghi ally.
Since then, a battle has been raging within the glass towers of the European Central Bank. Critics accuse the ECB head of having tied the currency to a poorly substantiated policy for years to come. Draghi’s people, meanwhile, rail against the Bundesbank, Germany’s central bank, saying in which is usually ideologically stubborn along with infused with nostalgia for the deutsche mark. inside the German government, meanwhile, there are those who scoff at Draghi’s “Atlas syndrome,” saying in which he seems to believe he is usually able to save the planet.
The atmosphere inside Draghi’s agency has become deadlocked, with the newspapers writing of “days of chaos” at the ECB. Former central bankers have taken to issuing written statements either in support of or opposition to Draghi. The German ECB Executive Board member, Sabine Lautenschläger, resigned in a huff in late September. along with the German tabloid Bild, a paper that has a sure nose for bad taste, reviled the ECB president as “Count Draghila” who is usually “sucking dry” the accounts of German savers.
‘My Own Style’
Europe’s common currency headquarters is usually more divided these days than in which has ever been, creating in which no wonder in which the future boss is usually also sending a variety of different signals at the moment. On the one hand, she insists in which she intends to stay true to the current course. On the various other, though, she has announced quite a few modifications in which could add up to a cultural revolution at ECB headquarters. Lagarde’s overarching goal is usually improving communication both within the central bank along with with the planet outside. She is usually also planning on expanding the range of issues addressed by the bank to include the promotion of women as well as climate policy. along with she has suggested in which she intends to conduct a fundamental examination of all monetary policy instruments in which there will be no taboos. “President Draghi had his own style,” she says. “I will have my own style.”
All of which raises the question: is usually she genuinely on the search for a fresh consensus on European monetary policy? Or does she just want to improve communication when in which comes to the controversial course charted by Draghi?
When she became the first woman chosen to lead the International Monetary Fund in 2011, a rather harmless photo, showing her doing yoga in her Georgetown apartment, triggered a mini scandal just a few weeks after she commenced. inside the picture, she was standing before floor-to-ceiling windows in a beige sweater along with jeans, which she rarely wears, that has a bouquet of yellow roses on a table next to her. Lagarde’s arms were stretched up to the ceiling inside the Tadasana, or Mountain Pose. The photo was taken for the French gossip magazine Paris Match, along with the accompanying article noted in which she did yoga for 20 minutes a day to relax. along with she said inside the piece in which her attitude was “Zen.”
in which wasn’t exactly the kind of humor in which the IMF was used to. in which is usually an institution in which sees itself as a bastion of economic excellence, employing the planet’s best economists, who in no way view the term aloof as an affront. As such, Lagarde’s excursion into the yellow press raised some bushy, gray eyebrows. Was the IMF suddenly joining forces with the tabloids?
“I am a bit anti-cyclical,” Lagarde said at the time when asked about the fresh style she brought to the institution. “A figure of contrast. A lawyer in a world of economists, a French woman in America. The result is usually in which people tend to underestimate you.”
She served as chairwoman of the IMF for eight years along with was quite successful. Her career before in which included a several-year tenure as the first woman president of the international legal firm Baker & McKenzie, then two years as French trade minister, one month as agricultural minister along with four years as finance minister. along with still, there are voices out there in which doubt if she has the necessary clout for her fresh position. “in which is usually worthy of note in which a lawyer can become head of the central bank, whereas nobody would likely ever think in which an economist could lead a high court,” says Isabel Schnabel, who will be taking Lautenschläger’s spot on the ECB Executive Board.
Not Afraid of Change
Lagarde merely responded in which being underestimated is usually a source of motivation.
When asked about the task facing her along with about the discord inside the ECB, she proffers a reminder of how large the task seemed when she took over leadership of the IMF eight years ago. She insists she isn’t trying to downplay the challenges ahead of her, nevertheless points out in which the IMF, with its 189 member states, isn’t a particularly straightforward institution either. Furthermore, she took over the reins coming from Dominique Strauss-Kahn, who had stumbled over allegations of attempted rape, creating him the third IMF head in succession to fail to complete a full term. Criminal proceedings against Strauss-Kahn were later abandoned.
in which should also be remembered in which Lagarde isn’t exactly afraid of change. At the IMF, she transformed the communications department into the institution’s most important power center. The various departments, which had until then operated largely independent of each various other as mini fiefdoms, were consolidated along with reined in. along with coming from in which point on, the communications department didn’t just decide how something was to be publicized, nevertheless what was to be publicized. over time, IMF Spokesman Gerry Rice became her most important confidant, say insiders.
Will she do the same thing again at ECB? “In those similar situations, I have tried to identify: What is usually the common ground?” she says. “What brings people together? What do they all believe in? along with not to focus too much on differences or individual agendas.”
She also already has her eyes on the appropriate instrument for doing so: A review of all monetary policy measures, which she intends to begin immediately after taking office. “I want to go along in which path with the members of the Governing Council along with in not bad collaboration with members of staff as well. I think in which should start very early on along with move at a steady pace.”
How not bad Lagarde is usually at solving conflicts can be seen in her relationship with Wolfgang Schäuble, who she knows well coming from the time when they both led the finance portfolios of their respective countries. Normally, Schäuble allows nobody to push him in his wheelchair, nevertheless he makes an exception for Lagarde, who is usually permitted to push him around in public.
A Jar of Honey
Usually, in which permission serves to indicate the kind of personal privileges in which Schäuble grants his French colleague. nevertheless Lagarde says there is usually more to in which than in which. On one occasion, she explains, Schäuble used the privilege to heroically help her out of a potentially embarrassing situation. She had fallen along with scraped her knee, causing blood to get on her pants, she relates, along with because she saw no various other possibility for hiding the stain, she asked Schäuble if he might allow her to push him — along with he agreed.
When asked today about his conflicts with Lagarde over the Greek debt crisis, on debt policy along with on numerous various other issues where they were so far apart, he says: “I never had large differences of opinion with her. Lagarde combines French elegance with American toughness. We are both lawyers along with we were consistently able to reach agreement on in which level.”
in which is usually impossible to get him to say even one particular negative thing about Lagarde. On one occasion, she flew to Berlin for the sole purpose of holding a speech for his 70th birthday party. When he was inside the hospital, she sent flowers. When he once came down that has a cold, she sent him a jar of honey coming from her own hive.
When Lagarde seeks to win someone over, she doesn’t hold back. along with she can do so without necessarily putting herself inside the spotlight, preferring to make others look not bad to ensure in which she gets what she wants. When Donald Trump was elected president of the United States, a man who stands in almost complete contrast to the international spirit of the IMF, she took advantage of a chance encounter with Ivanka Trump inside the halls of the White House for a bit of flattery. Maybe they should find a time to meet up, she told the president’s daughter, since they only knew each various other coming from television. A short time later, she appeared at the Women’s Summit in Berlin with Ivanka Trump along with Angela Merkel.
One of Lagarde’s tried along with true methods is usually to ensure a positive climate. Another is usually to involve her experts. At the IMF, she consistently listened to the advice given to her by senior economists. In exchange, she expects the experts to be flexible enough to be responsive to her needs — she wants them to not just voice their concerns, nevertheless also to present possible solutions.
A Tough Spot
When asked a couple of years ago what piece of advice she would likely give someone who suddenly found themselves at the helm of an organization like the IMF, Lagarde answered with the story of Einstein’s driver. The two of them swapped roles on one occasion, with the driver holding Einstein’s presentation while the physicist himself sat inside the audience. When a particularly challenging question was asked, the driver said: Please ask in which man inside the audience. in which, Lagarde says, is usually also her philosophy — namely in which you always need your own personal Einstein to help you out of a tough spot.
The ECB’s chief economist is usually Philip Lane. He is usually a native of Ireland, which is usually advantageous since Lagarde, as she herself says, has always got along excellently with the Irish throughout her career. nevertheless Lane is usually also a confidant of Draghi’s, with both belonging to the same school of economics along with both considered “doves” when in which comes to monetary policy, meaning they would likely rather pump too much liquidity into the economy than too little. “Our monetary policy works,” he says coming from behind his shiny, white conference table with the Frankfurt skyline inside the background. For a long time, “everything had been going inside the right direction.” Loans, growth, employment, inflation: Everything enhanced after the ECB dropped interest rates along with, starting inside the middle of This particular decade, began spending hundreds of billions of euros on sovereign bonds.
The not bad times would likely likely have continued, he says, if the U.S. hadn’t launched a trade war with China along with the British hadn’t voted in favor of Brexit. today, we are unfortunately facing “a phase of slower growth,” says Lane, going on to insist in which in which shouldn’t be mistaken for a recession. “I don’t currently see the end of the positive developments, just an interruption.”
The only question about in which is usually: If the situation isn’t in which bad, why did the ECB have to pass such a massive program in September? Why didn’t the bank simply drop interest rates, as the Bundesbank wanted, instead of opting to announce the indefinite continuation of sovereign bond purchases until the inflation rate is usually again at 2 percent? Was in which genuinely necessary?
Lane believes in which was, though he says: The situation could change if the trade conflict were to relax along with financially strong countries like Germany were to stimulate their economies. in which would likely lead to “monetary policy instruments functioning more rapidly.” along with in which, in turn, would likely mean they could be abandoned more quickly. “When the facts change,” as British economist John Maynard Keynes allegedly once said, “I change my mind.”
Lane’s future boss holds a similar view. “Monetary policy has done an awful lot inside the last few years,” Lagarde believes. “in which cannot be the only game in town. in which has to be a policy mix.” Higher state spending in some countries, more reforms in others, all underpinned by ECB monetary policy. “For policies to actually work efficiently, in which has to be accompanied by various other arms of in which policy mix.”
Lagarde has never felt limited by the strict boundaries of whatever position she has held. In her eight years at the IMF, she successively broadened the institution’s traditional mandate, with its strict focus on problems pertaining to debt along with balance of payments. Lagarde opened the IMF up to issues in which had previously been largely disregarded by institution economists, such as female participation inside the labor market.
She saw in which as an opportunity to make the IMF — which to in which point had widely been seen as a kind of all-powerful debt along with savings police — seem more sympathetic, more approachable along with more human. in which is usually a type in which she can imagine applying to the ECB, which is usually currently the focus of extreme ire coming from savers.
“My personal view is usually in which the euro, the ECB along with monetary policy have to be communicated to a broader audience,” she says. “There aren’t in which many women in finance, when you look at numbers, so certainly trying to encourage them along with to encourage young women to go into finance. I will see how I can do in which. along with I’m also very keen to explore … how the ECB can be an active participant inside the fight against climate change.”
The fight to boost women’s participation inside the labor market is usually particularly personal for Lagarde, after she was told at the beginning of her career in France in which as a woman, she could never be the head of a large legal firm. She did all she could to prove to the planet in which in which was possible.
“When I look around at my circle,” Lagarde says, “the table in which I will sit at will be populated that has a lot of gentlemen. In any function along with in any position in which I’ve had in my life, I have found ways to support women along with to encourage women.”
Still, Christine Lagarde is usually far coming from being a revolutionary. For in which, she enjoys the role of the Grand Dame far too much.
When Lagarde was 17, she wrote an essay with the title “Noblesse Oblige,” in which she related an anecdote of her mother telling her along with her three brothers: “You are today old enough to understand what I have to tell you. I am an aristocrat, a countess, which means you will be a countess- along with counts-in-waiting as soon as you turn 18. along with when I die one day, you will become countess along with count.”
A Full Plate
Her mother was a teacher along with was convinced in which she had aristocratic roots. She taught her daughter not bad manners along with to speak French without a regional accent. along with she hated the fact in which her daughter wore jeans.
Today, Christine Lagarde is usually 63, along with her rings, necklaces, brooches along with scarves, her ladylike elegance, have become something of her trademark. in which is usually one in which garners her respect coming from all sides, coming from young women along with successful men in equal measure.
For Wolfgang Schäuble, the euro is usually one of his political legacies. He was floor leader for the conservatives in German parliament when the currency union was negotiated inside the 1990s. Later, as German finance minister during the euro crisis along with the Greek debt crisis, he supported Draghi’s famous policy of “whatever in which takes.” Since then, though, he has followed Draghi’s ECB policies with unease, even calling in which a promotional program for the AfD, as Germany’s right-wing populist party is usually known. today, he says, “a normalization of monetary policy is usually necessary.” The path to in which goal is usually “difficult, of course,” nevertheless in which “must be embarked upon.”
His hopes are completely on Lagarde’s shoulders. Schäuble is usually fully aware of the deep rifts inside the Governing Council, the north-south divide in Europe along with the propaganda advantages enjoyed by the right-wing populists as a result of the low interest rate.
He doesn’t want to give the fresh ECB president any advice, knowing full well in which in which would likely be unwelcome. Instead, he is usually placing his faith in her experience, her ideas along with her social intelligence, which has helped her solve many previous conflicts in her career. “I am extremely confident,” says Schäuble, “in which she can lead the ECB out of a difficult situation.”
In just a few days, Lagarde will be starting her fresh job. along with she plans to start her German lessons on the same day. She features a lot on her plate.
“One day,” she says, “maybe I will be able to explain negative interest rates in German.”