Luxembourg’s Yves Mersch was named to the European Central Bank’s board after the longest battle over an appointment in the euro’s 13-year history, bolstering the ECB’s anti-inflation wing.
Mersch, 63, overcame Spain’s attempt to retain the seat and a plea by European parliamentarians to give the post to a woman. He will join the ECB’s six-member Frankfurt-based Executive Board on Dec. 15, according to a European Union statement issued at a summit in Brussels early today.
Mersch’s selection tilts the ECB board further toward monetary rigor after financially ailing Spain unsuccessfully sought to hold on to the post. As Luxembourg’s representative on the ECB’s wider interest-rate-setting Governing Council, Mersch is the euro area’s longest serving central-bank chief and enjoys a reputation as an inflation hawk.
“I am looking forward to bringing in my experience to the work of a highly professional team, being fully aware of the responsibility and challenges going along with the position especially during a severe financial crisis,” Mersch told Bloomberg News.
While following the German approach to interest rates, Mersch broke with the Bundesbank by supporting ECB President Mario Draghi’s planned bond-purchase program to combat the debt crisis.
“I have great admiration for the arguments of the Bundesbank but I also value the loyalty to the institution very highly,” Mersch said last month. Bundesbank opposition to the bond plan has “led to uncertainty and confusion in large parts of the German population,” he said.
With the fiscal crisis raging, the fight over who would succeed Spain’s Jose Manuel Gonzalez-Paramo, whose term ended May 31, marked the first time since the euro’s debut in 1999 that government leaders failed to immediately fill an ECB vacancy.
Spain tried to keep the job by nominating Antonio Sainz de Vicuna, head of legal services at the ECB, counting on European leaders to uphold an informal understanding that the four largest euro countries -- Germany, France, Italy and Spain -- would always have ECB board seats.
Germany led the way in tearing up that gentleman’s agreement, chafing at the perception that southern European countries were gaining the upper hand after the appointment of Italy’s Draghi as president last year. The bank’s vice president, Vitor Constancio, is from Portugal, a country drawing on rescue aid.
Spain’s leverage was undermined by its resorting to as much as 100 billion euros ($129 billion) in aid from richer northern countries for its banks, a relief program that was approved in July. Spain is also considering seeking even more aid to repair its government balance sheet.
Politics in France prolonged the ECB vacancy. Running for re-election in May, President Nicolas Sarkozy had pledged to back the Spanish candidate. His defeat by Francois Hollande cleared the way for finance ministers to pick Mersch in July.
Mersch then ran into opposition from the European Parliament, which plays an advisory role in central bank appointments. While praising his qualifications, the parliament issued its first-ever negative opinion on an ECB candidate in a protest against the shortage of women in top European jobs.
Two women, Sirkka Haemaelaeinen of Finland and Gertrude Tumpel-Gugerell of Austria, have sat on the ECB board. Assuming current members serve full terms, the next chance to appoint a woman won’t be until Constancio steps down in June 2018.
Resistance to Mersch in the parliament, which represents all 27 EU countries, was less than overwhelming. A vote last month against the circumstances of his appointment passed by only 325 to 300 with 49 abstentions.
EU President Herman Van Rompuy, who supervises top-level appointments, moved quickly to override the parliament. He sent letters to the 17 euro government leaders, setting Nov. 5 as a deadline for them to respond by mail, fax or e-mail with an assent to the Luxembourger.
Spain wouldn’t let the matter rest. Prime Minister Mariano Rajoy blocked the appointment by the exchange of letters, a standard procedure used for uncontroversial decisions. Rajoy’s maneuver forced the issue on to the agenda of the summit, a setting where Spain didn’t have a veto.
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