ECB Insight: National Political Games Leave Governing Council Two Short of a Full Slate

16 January 2025

By David Barwick – FRANKFURT (Econostream) – Arguably, 2025 has not gotten off to the best start for the European Central Bank’s Governing Council, which is two short of the normal complement of 26 members.

The fault, not surprisingly, lies with politicians, this time in Latvia and Slovenia, where neither government was able to get its act sufficiently together to avoid a vacancy at the head of the respective national central bank.

Not that the term ends of Latvijas Banka Governor Mārtiņš Kazāks or Banka Slovenije Governor Boštjan Vasle arrived as bolts out of the blue; it was known five years previously that Kazāks’ term would end last 20 December, and the Slovenian government knew six years ago that Vasle’s mandate would expire on Wednesday of last week.

Still, both governments managed to create frustratingly gratuitous messes at one of the most important institutions of their respective countries.

The solution in Latvia is particularly obvious, as Kazāks’ current status remains that of a candidate. ‘I maintain my candidacy for the position of President of the Bank of Latvia’, he wrote on X today. ‘Loyalty to Latvia, highly professional work for Latvia and politically independent institutions are one of the cornerstones of our Latvian democracy.’

However, though his return cannot be ruled out yet, he faces a struggle. Ironically, the political opposition in Latvia had opposed him in the initial unsuccessful round last month and now supports him, but as of yesterday, the opposite is true of the country’s prime minister, Evika Siliņa, and her party and coalition partners.

Moreover, it has emerged that there are several other potential candidates, at least some of whom appear to be serious contenders for the position.

At any rate, Latvia’s Parliament, the Saeima, must nominate candidates by the end of this month. Whilst Latvijas Banka Deputy Governor Māris Kālis is serving as acting governor for the time being, he does not have Governing Council voting rights, so that Latvia is likely to be without a vote at the monetary policy meeting on 30 January.

To be sure, the Governing Council does not normally resort to a formal vote anyway. But it is clear that a country that can only send an acting governor to the meeting, so a country that would not have a voice if there were a formal vote, is going to have less influence than it would otherwise on the deliberations and the outcome.

The Slovenian government has not covered itself with any more glory than Latvia, and perhaps even less, given the more uncertain state of affairs there and the very untransparent nature of the matter.

It can’t be excluded that Vasle will return, an outcome he had publicly hoped for and apparently still would like. However, it is up to President Nataša Pirc Musar to nominate someone for Slovenian Parliament to vote on, and as she has yet to do so after her previous nominee in November failed to secure adequate support, the process is effectively on hold.

In the meanwhile, Deputy Governor Primož Dolenc is acting governor, and Slovenia is effectively consigned to something not much better than observer status, à la its Baltic counterpart.

Even without Latvia and Slovenia, nearly a third of all national central banks of the euro area will face the possibility of a change of leadership between now and the end of 2025. At four out of six of them (Slovakia, the Netherlands, Austria and Malta), it is either unlikely a priori that the current governor would serve another term or has already been decided that he won’t.

We start with the Council member whose current term of office is over the soonest as of today and proceed from there:

1 June 2025 – Peter Kažimír, governor of the National Bank of Slovakia. Dogged by corruption charges he has robustly denied stemming from his earlier stint as finance minister, Kažimír, as we wrote earlier, is probably anything but preoccupied at this point with the question of whether he would wish to extend his current position for another six years (the limit is two terms). If and when he does, a significant number of Slovakian politicians are likely to be opposed, having already called repeatedly for him to resign. Although Kažimír rarely speaks beyond post-meeting statements, his pronouncements have been consistently quite hawkish.

30 June 2025 - Klaas Knot, governor of the Dutch National Bank: A third seven-year term is excluded. Earlier rumours suggested that his mandate could be temporarily extended so as to facilitate a potential transition to the ECB’s Executive Board down the road. These rumours have been laid to rest, and with Dutch national Frank Elderson already on the Board, Knot’s route to Frankfurt is anything but straightforward. Moreover, one of the most obvious positions in which Knot could have effectively awaited the appropriate moment to make such a move – namely as General Manager of the Bank for International Settlements – has now gone to former Banco de España Governor Pablo Hernández de Cos. Still, Knot’s term as chair of the Financial Stability Board, which was to end on 1 December 2024, has been extended, so it seems premature to predict his permanent departure from the Governing Council. When he does leave, temporarily or otherwise, the hawks will lose one of their most prominent representatives, even if he has softened somewhat in recent years.

11 July 2025 – Olli Rehn, governor of the Bank of Finland: Rehn last year expressed his interest in a second seven-year term at the head of the Finnish central bank. Parliament was to make a proposal to the government, which would then submit a proposal to the president, who gets the final say, but where things stand now, we frankly don’t know. We suspect that Rehn, who was European Commissioner for Economic and Monetary Affairs and the Euro from 2010 to 2014, will emerge victorious, in contrast to his unsuccessful bid to become Finland’s president last year, during which he took a leave of absence from the central bank. Rehn is centrist, though most recently has been quite concerned about the outlook for growth.

19 July 2025 – Mário Centeno, governor of the Banco de Portugal: Centeno, a Harvard-educated labour economist and only 58 years old when his current term of office ends, has confirmed his interest in a second five-year term, but on Wednesday was coy about his chances, noting only that the decision was up to the prime minister. The statute of the Portuguese central bank allows up to two mandates, contingent on the approval of the Council of Ministers, an executive body consisting of the prime minister and all senior ministers. Centeno, who is one of the most frequently heard Council members, is as dovish as they come.

31 August 2025 - Robert Holzmann, governor of the Austrian National Bank: The Austrian government took the unusual step of making it clear at the end of last March, well before the term of any member of the central bank’s board was up, that it intended to replace all four members as their mandates expired, including Holzmann. Holzmann, at 75 the oldest member of the ECB Governing Council (not counting his Maltese colleague Edward Scicluna, who is at least temporarily not exercising the functions of his office), stated thereafter that he was not interested in a second term. Since then, it has been decided that he would be replaced by Austrian Labor and Economy Minister Martin Kocher. The outspoken Holzmann has been arguably the most hawkish Council member and was the only one to oppose the start of monetary easing in June.

31 December 2025 - Edward Scicluna, governor of the Central Bank of Malta: Scicluna, beset by corruption charges, ceased at least temporarily from 1 August to exercise office, leaving Deputy Governor Alexander Demarco in the role of Acting Governor. At 78, Scicluna is easily the oldest member of the Governing Council, which – along with his legal problems - leads us to suspect that even if he returns to serve out his current term, he is highly unlikely to be reappointed. One of the quietest members of the Council, Scicluna is at least slightly dovish, and was ready to start cutting interest rates in March. Where Acting Governor Demarco stands in terms of monetary policy philosophy, and whether he will get the job on a permanent basis when Scicluna is definitively out, is less known.

30 March 2026 - Gediminas Šimkus, chairman of the board of the Bank of Lithuania: Currently the youngest member of the Governing Council and only on his first five-year term, we think there is good reason to believe that Šimkus will be interested in serving again. Šimkus is slightly hawkish, though more recently has been relatively supportive of policy easing.

31 May 2026 - Luis de Guindos, vice president of the ECB: De Guindos will be the first of the current Executive Board members whose term ends. None of them can be reappointed, the legal limit being one eight-year term. We will refrain from speculating here – with still almost two years to go – as to his possible successor.

26 June 2026 - Madis Müller, governor of Eesti Pank: The Estonian central bank is one of only two national central banks in the euro area (the other being the Bank of Spain) at which the governor is limited to one turn, so Müller will have to leave at the end of his current seven-year term of office. Müller is relatively hawkish, though by no means extreme.

26 June 2026 - Yannis Stournaras, governor of the Bank of Greece: Stournaras is the third longest-serving member of the Governing Council and one with a relatively high profile, given recent Greek economic history (in which Stournaras previously occupied the position of finance minister). Situated at the dovish extreme of the Council, Stournaras is in the last third of his second six-year term. Distinctly older than the average Council member and with a long career of public service, Stournaras had been expected to retire when his current term ends, but this remains to be seen and some expect otherwise.

For the sake of completeness, we continue to list below all remaining members of the ECB Governing Council by the date of their respective end of term, but add nothing to this in view of how far off these potential departures remain:

31 August 2026 - Gabriel Makhlouf, governor of the Central Bank of Ireland

31 May 2027 - Philip Lane, ECB Executive Board member

31 October 2027 - Christine Lagarde, president of the ECB

31 October 2027 – François Villeroy de Galhau, governor of the Banque de France

31 December 2027 - Isabel Schnabel, ECB Executive Board member

14 December 2028 - Frank Elderson, ECB Executive Board member

31 December 2028 - Pierre Wunsch, governor of the National Bank of Belgium

10 April 2029 - Christodoulos Patsalides, governor of the Central Bank of Cyprus

31 October 2029 - Fabio Panetta, governor of the Banca d’Italia

12 July 2030 - Boris Vujčić, governor of the Croatian National Bank

23 September 2030 – José Luis Escrivá, governor of the Banco de España

31 December 2030 - Joachim Nagel, president of the German Bundesbank

31 December 2030 - Gaston Reinesch, governor of the Central Bank of Luxembourg

31 October 2031 – Piero Cipollone, ECB Executive Board member