FRANCE, Paris - Christine Lagarde, Managing Director of the International Monetary Fund (IMF), has been appointed to be the President of the European Central Bank (ECB). The primary function of the president of the ECB is to manage the monetary policy in the Eurozone of the European Union (EU), particularly about the Euro. Lagarde will take over from current president, Mario Draghi who has led the organization since 2011.
One of the most influential women in the European Union, Lagarde shepherded the IMF through the 2008 global recession, which had far-reaching adverse impacts on large and small economies. Under her management, the IMF orchestrated a critical economic bailout for Greece, a deal negotiated in tandem with the ECB and the European Commission to mitigate the risk that the debt load could adversely affect the Eurozone and its currency, the Euro.
Though her bonafides run deep, and respect from heads of state and her peers is high, she unlike previous ECB presidents, is not an economist, nor does she a background managing a National Central Bank. However, she does bring a wealth of experience captaining the IMF, leveraging her skills as a trained lawyer of sanguinity and strategic thinking to achieve the requisite organizational objectives.
Her business acumen, national and international relationships, as well as her fundamental understanding of how to leverage private and public partnerships, suggests she will be successful. Though this position will be slightly more political, she has vast experience operating in the political milieu of international policy, foreign affairs, and balancing competing economic demands from member countries.
As recently demonstrated in her participation at the G20, Lagarde is a force to be reckoned with, and her gravitas is evident in her interactions with influential world leaders, especially European counterparts Angela Merkle, Chairman of Germany and Emmanuelle Macron, President of France. Just as Lagarde shepherded the IMF and the nations which depended upon it during previously economically challenging times, her appointment should quell the nerves of many who are witnessing a slowdown in global economic growth, historically low inflation, and the destabilization of existing trading relationships as populace agendas push bilateralism.
Much like Greece’s financial meltdown of 2008, in which the ECU had to loan the government money in what has become to be known as the “biggest financial rescue of a bankrupt country in history. As of January 2019, Greece has only repaid 41.6 billion euros.” Currently, the Italian government is facing a similar currency issue in which its debt load has reached crisis levels and is sure to threaten the Euro. Lagarde is certain to inherit the responsibility of stabilizing their economy, but she has proven to be able to navigate complex situations using the appropriate monetary policies to mitigate potential downsides.
Because Lagarde’s approach to managing economic reforms, debt restructuring, and increased integration of the eurozone, along with her conservative approach to change, should calm the markets and assure governments of a smooth transition in an era of disrupters and radicals. Her steady hand is what is required in these turbulent times of political upheaval and realignment, but her professionalism and political savvy should assure us that the ship will not falter during impending economic downturns.
Greek Debt Crisis Explained (thebalance.com)
Greece’s Debt Due (wsj.com)
Euro Zone Seals Second Greek Bailout (ibtimes.com)
Trading Economics G20 (tradingeconomics.com)