Economics – Conciliator-In-Chief

Can Christine Lagarde heal the rifts at the European Central Bank left behind by Super Mario?

- By Jana Randow and Sandrine Rastello, with Viktoria Dendrinou and Helene Fouquet

Christine Lagarde received two gifts when she took over the presidency of the European Central Bank on Nov. 1, both temporary and both from Mario Draghi. The first was ceremonially presented to her by the outgoing ECB president: a golden bell used to call the bank’s policymakers to order. The second was the fresh round of monetary stimulus Draghi pushed through in his final weeks. This should put off the next decision on whether to raise interest rates—always politically fraught—until at least 2022.

That may sound like the promise of a smooth transition, but it’s not. Already, Lagarde’s leadership skills are being tested by two other things Draghi is leaving behind: rifts among ECB policymakers brought on by unhappiness over his final round of pump-priming and their mounting concern that the central bank’s efforts to revive the eurozone economy are being undermined by stingy national governments.

Lagarde, 63, is the ECB’s first female president, but then again she’s been shattering glass ceilings throughout her career. She was also the first woman to head the International Monetary Fund and France’s first female finance minister. Before that, she spent two decades as a lawyer, rising to become chairman of the Chicago-based firm Baker McKenzie.

Now, Lagarde will oversee the world’s second-biggest currency in a diverse, 19-nation economy for which a single monetary policy sometimes seems an ill fit. While members of the decisionmaking Governing Council attend as Europeans, not as representatives of their country, they inevitably bring views rooted in their cultural history.