BERLIN, Feb 18 (Reuters Breakingviews) - Resignitis is a fast-spreading epidemic among European central bankers. Christine Lagarde, the European Central Bank president, intends to leave before the end of her term, the Financial Times reported, opens new tab on Wednesday. The news follows Bank of France governor Francois Villeroy de Galhau’s announcement on February 9 that he too would resign early.

The ECB said on Wednesday that Lagarde had not taken any decision regarding the end of her term. But if her early exit is confirmed, the main consequence of the twin resignations will be to deprive French President Emmanuel Macron’s own successor of a say in two crucial central banking decisions. Presidential elections in France are due in April or May next year, and both central bankers were due to complete their terms at the end of 2027. Since the favorite to win next year’s presidential contest is whoever runs for the far-right Rassemblement National - whether leader Marine Le Pen or her acolyte Jordan Bardella - some populist feathers are likely to be ruffled. But a smooth changing of the guard among European central bankers will help reassure international investors about the strength of the euro zone and of the common currency itself.

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The obvious attempt to circumvent the choices of a future president may not contradict the letter of the Euro founding treaties - anyone, after all, has the right to resign at any time - but they don’t seem to chime with their spirit. A scenario where Le Pen would make it an electoral argument, railing against the elite’s conspiracy to restrain her power, is easy to imagine. But the spirit of the treaty also forces policymakers to make sure the ECB governing council - made up of 21 national central bank governors and six ECB executive board members – can function properly, and that the euro’s existence or integrity is not threatened.

Le Pen is no longer advocating that France leave the euro zone, as she was when she was running for president in 2017. But international investors could fret at the idea she would have to make the two key personnel decisions after barely a few weeks in office. Support for the euro is at a 21-year high, opens new tab in the euro zone, with 83% of the population having a favourable opinion of their joint currency. And trust in the ECB, which started falling at the heart of the eurozone crisis in 2011, is now back, opens new tab to its pre-crisis level.

The election of a far-right president in Europe’s second-largest economy is likely to rock the markets’ boat. And considering France’s perilous fiscal position, with public debt seen by the International Monetary Fund at nearly 120% of GDP this year, the need for truly independent central bankers has never been so acute. Uncertainty, or division about the direction of monetary policy, would make things worse. Why take the risk?

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Context News

• European Central Bank President Christine Lagarde is focused on her job and has not taken any decision regarding the end of her term, an ECB spokesperson said on Wednesday after a news report claimed she plans to leave before her term ends in October 2027.
• The Financial Times reported on Wednesday that Lagarde is looking to leave before the French presidential election in April next year to allow outgoing President Emmanuel Macron to have an input into finding her successor.

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Editing by George Hay; Production by Shrabani Chakraborty

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Pierre Briancon

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Pierre Briancon is a Breakingviews columnist, writing on European business and economics. He was previously a writer or editor at Barron’s, Politico, and Breakingviews for a first stint as Paris correspondent and European editor. For the first part of his career he was a foreign correspondent and editor at Libération, the French newspaper. He was also an economics columnist for Le Monde and for French public radio.

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