ECB Insight: Olli Rehn – Bridging the Gap or Straddling the Divide?

23 June 2025

By David Barwick – FRANKFURT (Econostream) – With less than a year to go until the next anticipated vacancy on the European Central Bank’s Executive Board—Vice President Luis de Guindos is set to depart at the end of May 2026—we consider it timely to examine some of the policymakers regarded as potential Board candidates.

We leave aside for present purposes the critical role domestic politics will play in determining national backing, and likewise refrain from venturing into the thicket of other high-level EU appointments, though these will provide essential context when the time comes.

We begin with current ECB Governing Council member and Bank of Finland Governor Olli Rehn.

One clear upside of a potential Rehn candidacy for any Board seat is symbolic: among the 11 founding euro‑area member states, Finland has had the longest absence on the Board. The only Finn ever to serve was Sirkka Hämäläinen, whose single, non-renewable five-year term (1 June 1998 to 31 May 2003) was the shortest of the originally staggered mandates designed to ensure one expiry per year.

Rehn himself brings European experience of a breadth arguably unmatched by anyone else: after a stint in the European Parliament, he spent a decade as a European Commissioner, ultimately as Commissioner for Economic and Monetary Affairs. In the latter capacity, he attended ECB Governing Council meetings as an observer.

His initial seven-year term at the helm of Finland’s central bank is due to end next month, but a second mandate in the position is already his.

He will be 64 years and two months old when the next ECB Executive Board vacancy is due to open on 1 June 2026—older than the average new member and even the average president on assuming office, but well within historical norms; Christine Lagarde was just four months younger when appointed president in 2019.

He is often cited as a potential compromise candidate for Lagarde’s job when it opens up end-October 2027: a northerner theoretically acceptable to both fiscally conservative countries and more peripheral member states.

But that presumes a need for compromise that may not exist, given that the leading so-called hawkish candidates are not especially hawkish.

And even if such a need does arise, Rehn might not be the answer. His record as European Commissioner for Economic and Monetary Affairs from 2010 to 2014 could yet prove a liability, having drawn criticism at the time from several peripheral euro area countries for his firm stance on fiscal discipline.

He spearheaded efforts to tighten the Stability and Growth Pact in 2010–11, expanded the Commission’s enforcement powers, and in 2014 denied France’s request for an extension to its deficit-reduction deadline.

It may be that few hold a grudge that long—particularly given his recent, markedly dovish monetary views.

But his persistent focus on weak economic growth over the past year could raise a fundamental question for the more conservative core countries: Is this a compromise or a capitulation?

Finally, while Rehn’s command of English is strong, it may not match the fluency of previous ECB presidents—a detail that could matter at the very top.

Rehn’s communication instincts have also occasionally missed the mark. In an interview on the eve of the Bank of Finland’s 2024 annual conference, he appeared to pre-empt Governing Council consensus by suggesting a specific rate path, prompting discomfort among colleagues.

Most notably, Banca d’Italia Governor Fabio Panetta, also present at the event, was asked to publicly endorse Rehn’s remarks—and conspicuously declined.

Rehn then weakly claimed to have been misquoted, but the episode nonetheless served as a reminder that his messaging can at times be out of sync with the more disciplined communication style typically expected of senior ECB figures.

Ultimately, we are probably a bit less optimistic than some observers about Rehn’s chances of succeeding Lagarde, though this does not mean another Board slot could not be his.

That is by no means to dismiss such a formally well-qualified candidate; given the complex horse-trading that inevitably precedes such decisions, it is far too early to rule someone like Rehn out.

Were Rehn to get the top job, then where Lagarde has seen her role as that of a shepherd keeping the flock together—suppressing personal policy preferences in the interest of consensus—we would expect a shift. The result could be a more dovish and activist ECB.

Whether that also means a more divided ECB would depend on circumstances—think Draghi.