ECB’s Kazāks Hoping for Second Term at Helm of Latvian Central Bank

18 September 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks stands ready to remain in his current post of Governor of Latvijas Banka when his first term comes to an end in three months – now the Latvian Parliament just has to agree to the idea.

‘Mārtiņš Kazāks would be ready to run for and continue to fulfil the duties of the Governor of Latvijas Banka and a member of the ECB Governing Council for the second five-year term if he received parliamentary support’, a spokesman of Latvijas Banka told Econostream.

Kazāks for the moment ‘has not yet been invited for a hearing in the parliamentary factions’, the spokesman said.

Such decisions, as seen most recently in particularly lamentable form in Spain, tend to be fraught with domestic political considerations, so whether Kazāks will get a second term may remain open for many weeks yet.

In Cyprus this past April, the replacement by the country’s president of the then-governor of the central bank, Constantinos Herodotou, was only announced two days before the latter’s term ended. Similarly, in July, Croatian National Bank Governor Boris Vujčić was reappointed by parliamentary decision to a third term only on the last day of his previous mandate.

For Kazāks to receive a second term, at least ten members of the Saeima, Latvia’s national parliament, must first take the initiative to propose a parliamentary vote approving this.

Kazāks’ chances of reappointment should at least be decent, though, given that no one disputes his success in restoring the reputation of the country’s central bank both nationally and internationally.

That reputation was severely tarnished at the time he assumed office in December 2019 as a result of corruption charges brought against his predecessor, who for more than a year had refused to resign in a messy, very public spat with Latvian authorities.

His predecessor’s case is still working its way through Latvia’s legal system, but in the nearly five years since the Saeima overwhelmingly endorsed Kazāks’ first appointment, Latvijas Banka has managed to become a model of transparency with a standard clearly higher than that of most other national central banks of the euro area.

Domestically, the reform-minded Kazāks has focused on the security of the country’s system of cash machines and on resolving crises in the cashless payment sector. He has also streamlined his institution’s governance to suit new legal requirements, reducing Latvijas Banka staffing numbers in the process by nearly a fifth. And as mandated by Saeima, Latvia’s financial market supervisor is now fully integrated into the central bank.

As member of the ECB Governing Council, Kazāks, who earlier than most saw the post-pandemic inflation surge coming and deserves a share of the credit for the ECB’s evidently successful policy reaction, has acquired the reputation of a relatively hawkish central banker, but with a flexibility that some consider his predecessor to have lacked.

Rather, Kazāks, whose doctorate in economics is from University College London, is seen as a thoughtful student of monetary policy, genuinely interested in and willing to consider other views as well as to patiently explain his own.

Previously a member of the Council of Latvijas Banka, Kazāks was also chief economist at the Nordic-Baltic banking group Swedbank.