As Clock Runs Down Fast, Madrid Appears Poised to Appoint Bank of Spain Head

3 September 2024

By Marta Vilar – MADRID (Econostream) – Time is running out at the Bank of Spain, with days left before the institution could potentially be leaderless at the 12 September meeting of the European Central Bank’s Governing Council, at which monetary authorities are widely expected to cut interest rates by 25bp.

The willigness of Spanish Economy Minister Carlos Cuerpo to prolong the matter appears to have reached an end. It is Cuerpo’s responsibility to find a new governor, and he appears set to do so even at the price of ignoring the wishes of the political opposition.

According to the latest schedule for Spanish Parliament, published on Monday, Cuerpo will gather the Economy, Trade and Digital Transformation Committee of the lower chamber on Wednesday to ‘report on the proposed candidate for Governor of the Bank of Spain’.

This being the first step in appointing a new governor, the calendar entry strongly suggests that he is forging ahead with or without the opposition on board.

Speaking in an interview on Spanish TV on Monday, Cuerpo promised that his candidate 'will be a person with training, experience and a CV more than suitable, in line and on a par with the previous governor or even above him.'

Margarita Delgado, deputy governor of the Bank of Spain, has been acting as interim head since Pablo Hernández de Cos’ term as governor came to an end on 11 June. De Cos, though highly regarded at home and internationally, was legally able to serve only one term, as stipulated by Spanish law. That also applies to Delgado, whose current term ends one week from today.

Speculation about de Cos' successor has been rampant. José Luis Escrivá, currently the minister of Digital Transformation and Civil Services, was flagged as the government’s preferred candidate in July.

However, Partido Popular (PP), the leading opposition party in Spain, opposed Escrivá’s appointment, arguing that he was insufficiently independent of the government.

On Monday, the PP’s deputy secretary of economy, Juan Bravo, suggested that the PP would refuse to sign off on the government's candidate to head the Bank of Spain if this were Escrivá.

If the choice of candidate ‘means this person would move from one post to another, we have already made clear there will be no negotiation’, Bravo declared.

The opposition's blessing is not a must, however. A political agreement is not legally necessary to appoint a new governor at the Bank of Spain, even if officials close to the matter argue that it has always been customary.

Back in July, ECB vice president Luis de Guindos said he hoped that ‘we will have a new governor of the Banco de España before our next meeting’ on 12 September, two days after Delgado’s term expires.

A Eurosystem insider suggested that the Governing Council was not overly concerned by Spain's slowness in finding a successor for de Cos, arguing that recent similar decisions around the euro area had often been made late.

The Spanish government seems determined to resolve the impasse by proceeding without the approval of the political opposition, which suggests that Escrivá, who on paper seems eminently qualified to help set monetary policy for the euro area, will be the candidate after all.

That said, Delgado should not be ruled out. Cuerpo could easily reason that her gender and obvious qualifications for a function she is already exercising on a provisional basis would make it difficult for the opposition to insist on being a spanner in the works.

Indeed, the PP has signalled its willingness to accept Delgado as a compromise candidate preferable to Escrivá. The hitch in this case is that Cuerpo would have presumably secured the agreement previously, but has apparently not done so, suggesting a determination to stick with Escrivá.

A remaining question is whether the government is really willing to ‘go solo’ and risk breaking with tradition by appointing a candidate over the opposition’s head.

Still, Spanish government sources emphasised to Econostream their intention to appoint a governor before the ECB Governing Council gathers on September 12.