ECB’s Kazāks Future Still Uncertain as Latvijas Banka Leadership Question Takes Another Turn

19 December 2024

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks’ chances of remaining head of Latvia’s central bank took another turn late Wednesday, even as the question of who will lead Latvijas Banka continues to elude resolution.

Kazāks, whose first five-year term of office ends on 21 December, was one of three candidates for the position of governor, the other primary contender having been Reinis Bērziņš, CEO of state-owned development finance institution Altum.

However, Latvian parliamentary supporters of Bērziņš and of Kazāks yesterday withdrew the candidacies of both, following which the Latvian Parliament, the Saeima, today failed to support the third candidate.

Consequently, the Saeima appointed Latvijas Banka Deputy Governor Māris Kālis acting governor until the position is filled on a permanent basis.

This means that new candidates will have to be identified and a vote taken. The timing of this is up in the air, but before January little if any progress is likely. Until the process is brought to a successful conclusion, Latvia will have no vote on the ECB’s Governing Council.

‘The ECB will assess whether to allow Māris Kālis to participate in the ECB Governing Council meetings as an observer’, Latvijas Banka said in a statement.

Econostream fully expects Kazāks to remain interested in a second term, which would be perfectly possible according to Latvian law.

However, it will probably be an uphill battle, despite the fact that he is well respected by his peers and is widely agreed to have fully restored the reputation of the Latvian central bank after his predecessor departed amid corruption charges.