2019-11-11_Bloomberg_Businessweek

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Cristina Lindblad PHOTOGRAPH

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EVA

O’LEARY

FOR

BLOOMBERG

BUSINESSWEEK

Bloomberg Businessweek November 11, 2019

ChristineLagardereceivedtwogiftswhenshe

took overthepresidencyoftheEuropeanCentral

Bank onNov.1,bothtemporaryandbothfrom

Mario Draghi.Thefirstwasceremoniallypre-

sented toherbytheoutgoingECBpresident:a

golden bellusedtocallthebank’spolicymakers

to order.Thesecondwasthefreshroundofmon-

etary stimulusDraghipushedthroughinhisfinal

weeks. Thisshouldputoffthenextdecisionon

whethertoraiseinterestrates—alwayspolitically

fraught—untilatleast2022.

Thatmaysoundlikethepromiseofa smooth

transition,butit’snot.Already,Lagarde’slead-

ership skillsarebeingtestedbytwootherthings

Draghi isleavingbehind:riftsamongECBpolicy-

makersbroughtonbyunhappinessoverhisfinal

round ofpumpprimingandtheirmountingcon-

cern thatthecentralbank’seffortstorevivethe

euro zoneeconomyarebeingunderminedby

stingy nationalgovernments.

Lagarde,63,istheECB’sfirstfemalepresi-

dent, butthenagainshe’sbeenshatteringglass

ceilingsthroughouthercareer.Shewasalsothe

first womantoheadtheInternationalMonetary

FundandFrance’sfirstfemalefinanceminister.

Beforethat,shespenttwodecadesasa lawyer,

rising tobecomechairmanoftheChicago-based

firmBakerMcKenzie.

Now, Lagarde will oversee the world’s

second-biggestcurrencyina diverse,19-nationecon-

omyforwhicha singlemonetarypolicysometimes

seemsanillfit.Whilemembersofthedecision-

making GoverningCouncilattendasEuropeans,not

as representativesoftheircountry,theyinevitably

bring viewsrootedintheirculturalhistory.

To thischallenge,Lagardebringsa skillsetdif-

ferentfromherpredecessors’.She’sthefirstECB

chiefneithertrainedasaneconomistnorexperi-

encedasa centralbanker.Indeed,she’spublicly

admittedshehatesmath.

So don’texpecthertodigdeepintomonetary

mechanicsandneo-Keynesiantheory.Instead,she’ll

probablyrelyheavilyontheECB’shordesofexperts

foradvicewhileshecraftsdiplomaticsolutionsto

vexing problems,accordingtomultiplesourceswho

spoketoBloombergonconditionofanonymityso

theycouldexpressthemselvesopenly.

“Throughouthercareer,Lagardehasbeena

synthesizer,a moderator,andanarbiterinthe

waysheactedintheinternationalcommunity,and

that’showI’dseeshewouldleadtheECB,”says

NathanSheets,a formerundersecretaryforinter-

nationalaffairsattheU.S.Treasury.“She’llbegood

atfindingcommonground—alsowiththepolitical

leadershipofEurope—andif pastperformanceis

anyguide,she’llhelptheinstitutionshine.”

TheECBneedsa bitofshine.Adecadeof

crisis-fightinghaspushedit toitslimits,andforall

Draghihasdonetodefendthesinglecurrency,he’s

leavingdeepscars.Trillionsofeurosofstimulus

failedtoliftinflationtothecentralbank’starget

ofjustbelow2%,openingunprecedenteddissent

betweenthosecolleagueswhobackedhispolicies,

fromnegativeinterestratestoextraordinarybond

purchases,andthoselosingfaiththatevermore

easing is the right solution.

Governors from economically conservative

economies such as Austria, Germany, and the

Netherlands opposed Draghi’s stimulus package.

Southern European nations supported it. The

outgoing ECB president contributed to the divi-

sions. His pledge in 2012 to do “whatever it takes”

to defend the euro, quantitative easing in 2015,

and a final easing push in September, were all

largely go-it-alone initiatives that irritated some

of his peers.

Lagarde, in contrast, is a consensus builder. Her

style is to come to issues without preconceived

ideas and then lean on colleagues to examine every

angle of a problem, according to people who know

her. Once she’s convinced of an argument or a path

by her staff, she goes all out to defend the position.

Her detractors, on the other hand, say she follows

that advice to a fault.

Her negotiating skills were in evidence during

the Greek financial crisis, when Lagarde’s IMF,

the European Union, and the ECB formed the

so-called troika that would set and enforce bailout

terms for Athens. During an eleventh-hour crisis

meeting in June 2015—when many participants

Conciliator-in-Chief

Can Christine Lagarde heal the rifts at the

European Central Bank left behind by Super Mario?