Germany’s representative on the European Central Bank’s executive board has quit in a surprise move that highlights the widening split within the institution’s top ranks over its recent decision to loosen monetary policy.
Sabine Lautenschläger’s resignation points to deep divisions at the ECB and raises the crucial question of who Germany will choose to replace her at a time when the central bank’s low interest rate policies are attracting fierce criticism within the country.
Ms Lautenschläger joined the ECB’s executive board in January 2014 on an eight-year term. She was recently replaced as vice-chair of the supervisory board of the ECB’s Single Supervisory Mechanism, which oversees the eurozone’s biggest banks, having served a five-year term.
Her departure, which removes the only female member of the ECB’s 25-person governing council, comes only weeks before Mario Draghi is set to hand over as president to Christine Lagarde on November 1.
Earlier this month, Mr Draghi prompted unusually vocal opposition from a minority of governing council members after announcing a cut in the ECB’s deposit rate to a record low of -0.5 per cent and the restarting of its €2.6tn bond-purchase programme after a nine-month hiatus.
Ms Lautenschläger is one of the leading hawks on the council and was one of a handful of members who spoke up during the meeting two weeks ago to state their opposition to restarting the ECB’s bond-buying scheme.
In the two weeks since the meeting, the heads of the German, French, Dutch and Austrian central banks have all publicly expressed their opposition to the ECB’s latest decision. Together those countries account for more than half of overall eurozone GDP.
Ms Lautenschläger is not the first German representative on the ECB board to quit after disagreeing with its dovish monetary policy. In 2011, Jürgen Stark quit in protest over the central bank’s purchases of government bonds in response to the eurozone debt crisis. Earlier that year, Axel Weber quit as head of Germany’s Bundesbank after fiercely opposing the ECB’s strategy.
The ECB said in a statement on Wednesday: “President Mario Draghi thanked her for her instrumental role in helping set up and steer Europe-wide banking supervision, a key pillar of banking union, as well as her unwavering commitment to Europe.”
Frederik Ducrozet, economist at Pictet Wealth Management, said in a tweet that Ms Lautenschläger’s departure meant for the time being there was no German on the executive board and no woman on the 25-member governing council. “Berlin’s choice will be crucial on all levels.”
Mr Ducrozet added that Isabel Schnabel, professor of financial economics at Bonn University and one of the five members of Germany’s Council of Economic Experts, “would be a perfect fit indeed”. Another potential candidate is Claudia Buch, vice-president of the German central bank.