Philip Lane set for ECB executive seat on second attempt

Central Bank governor only name put forward for chief economist role

Philip Lane’s departure from the Central Bank would create a race for the governorship of the institution. Photograph: Nick Bradshaw

Philip Lane’s departure from the Central Bank would create a race for the governorship of the institution. Photograph: Nick Bradshaw

 

Central Bank governor Philip Lane is poised to win the State’s first executive seat at the European Central Bank (ECB), triggering a succession race that may lead to the first female head of the 76-year-old Irish institution.

Prof Lane (49) was the only name put forward by euro zone governments by a deadline on Wednesday for candidates to succeed the ECB’s chief economist, Peter Praet, according to Mário Centeno, president of the Eurogroup of finance ministers from the single currency area. Dr Praet retires in May.

European finance ministers will formally endorse the nomination at a meeting on February 12th, before passing it on to EU governments for final approval.

Deputy Central Bank governor Sharon Donnery, who missed out in a competition late last year to head the ECB’s banking supervision arm, is hotly tipped as a successor to Prof Lane.

Robert Watt, secretary general of the Department of Public Expenditure and Reform, who went up against Prof Lane in 2015 for the job, and Department of Finance secretary general Derek Moran have also been mentioned as possible contenders.

The three individuals either declined to comment or didn’t respond to requests for comment, either personally or through representatives.

Prof Lane’s candidacy comes almost a year after the Minister for Finance Paschal Donohoe withdrew the governor from the last contest for an executive ECB position, when it became apparent that his rival, Spain’s economy minister Louis de Guidos, had the necessary political support from fellow finance ministers.

That was despite Prof Lane’s technical expertise “shining through” when both candidates were grilled by the European Parliament’s influential economic and monetary affairs committee, according to members of the group.

Mr Donohoe formally nominated Prof Lane last week to take up Dr Praet’s seat. Ireland is alone among the founding members of the ECB in not having held an executive role at the ECB.

“I am delighted to hear that governor Lane is standing unopposed for the position on the executive board of the ECB,” Mr Donohoe said on Wednesday. “ Philip is an exceptionally well qualified candidate and I have every confidence would do an exemplary job if appointed to the role.”

Important juncture

The position comes up at an important juncture for the ECB, which ended new bond purchases under its €2.6 trillion quantitative-easing programme in December and has indicated that interest rates may rise later this year for the first time in more than a decade.

Still, many economists and financial market participants now believe the ECB’s benchmark rate will remain at zero until the middle of 2020, following a raft of weak economic date across the euro zone in recent times.

Having graduated with a first-class honours degree in economics from Trinity College Dublin (TCD) in 1991, Prof Lane went on to secure a PhD at Harvard in the US and to lecture at fellow Ivy League school Columbia University.

He returned to Ireland in 1997 to take up a lecturing position and went on to head the economics department in TCD, before being appointed in late 2015 as the 11th governor of the Central Bank of Ireland, succeeding fellow academic, Patrick Honohan.