Bloomberg News

Estonia Approves Harvard-Educated ‘Evil Oracle’ for ECB

October 11, 2011

(Updates with comment from Hansson in fourth paragraph.)

Oct. 11 (Bloomberg) -- Estonian central bank supervisors picked Ardo Hansson, a Harvard-educated economist at the World Bank, to represent the country at the European Central Bank.

The eight-member board of politicians and academics voted 5-3 in the capital, Tallinn, today to elect Hansson as a successor to Governor Andres Lipstok over Andres Sutt, an adviser at the International Monetary Fund. Hansson’s seven-year term starts on June 8, 2012, pending a background check and formal confirmation by President Toomas Ilves.

Europe’s governments are struggling to contain a debt crisis that has shaken the euro. Lipstok led a central bank that managed a currency peg during the global financial crisis and helped Estonia adopt the euro this year with the lowest debt in the 27-nation European Union.

“Anybody from Estonia would stand up for conservative principles,” Hansson told journalists after the decision. “I think conservative principles have served us very well in our internal deliberation, and I think for the help of the broader European economy in the long run we want to make sure those principles are enshrined.”

Hansson, 53, a Chicago-born son of Estonian immigrants with a Ph.D. in Economics from Harvard University, has been the World Bank’s lead economist for China since September 2008.

U.S. National

After Estonia regained independence in 1991, Hansson worked as an adviser to several prime ministers and, together with Jeffrey Sachs of Columbia University, was among the architects of the Estonian kroon, later replaced by the euro in January. He will be the first U.S. national on the ECB’s governing council.

By next June, “it would be time to start actively contributing and find our niches of expertise,” Hansson said yesterday in an interview with public broadcaster Eesti Rahvusringhaeaeling. “My background is very similar to those of most people on the ECB governing council, meaning there is respect for each other’s knowledge and experiences.

An advocate of a frugal lifestyle, Hansson became known to the public as the ‘‘Evil Oracle’’ for predicting Estonia’s first post-independence recession and the bursting of a stock-market bubble in 1997. During the 1990s, he consulted the governments of Mongolia, Poland, Slovenia and Ukraine.

Euro region members can avoid the possible spread of the debt crisis by being more ‘‘pro-active’’ on fiscal policy and encouraging bank consolidation, Hansson said in a phone interview from Beijing last month. He is more afraid of inflation rather than deflation in the Europe, Hansson was cited as saying in an interview by Aeripaeev on Oct. 7.

--With assistance from Jana Randow in Frankfurt. Editors: Balazs Penz, Douglas Lytle

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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