ECB Insight: As Banco de Portugal Decision Nears, ECB Role for Centeno Remains Remote

21 July 2025

By David Barwick – FRANKFURT (Econostream) – With the question of Mário Centeno’s future at Banco de Portugal seemingly close to resolution, a new possibility looms: could he be headed for an even higher post on the ECB’s Executive Board?

Centeno’s five-year term at the Portuguese central bank was up on Saturday, and most indications over recent months were that the government’s preference was to replace him. In flagging a forthcoming decision regarding the succession, however, Prime Minister Luís Montenegro on Sunday not only kept alive the possibility of Centeno’s reappointment, but also clearly acknowledged the latter’s qualifications for the position.

We suspect that there is now a much higher chance of Centeno’s reappointment than previously thought, even if such an outcome may—assuming it happens—chiefly reflect the government’s simple failure to find another successor for someone it is clearly not enamoured of.

It has been argued that Centeno, who was Portuguese finance minister and head of the Eurogroup until moving to the central bank, should have a shot at an ECB Executive Board position.

The presidency can probably be ruled out, even easily. Indeed, Centeno’s name does not figure prominently in relevant speculation, and at least from today’s perspective, Centeno is simply too dovish—our ranking consistently situates him at the dovish extreme of the Council.

Such pronounced dovishness would not sit well everywhere, including Berlin, which arguably will have more say than usual about the next ECB president when Christine Lagarde leaves on 31 October 2027.

Moreover, we have difficulty envisioning a constellation of high-level EU appointments that would be consistent with the installation of a Portuguese national at the head of the ECB. For one thing, former Portuguese Prime Minister António Costa is already president of the European Council.

It is true that Costa was elected mid-cycle and will thus only complete the remainder of his predecessor’s term of office, ending in May 2026. But leaving aside the question of whether Costa will be re-elected, the larger point is that a relatively small EU member country is arguably already receiving its fair share of EU top jobs. Others also want their turns.

Indeed, this consideration could also be an obstacle in Centeno’s path to the ECB vice presidency, which will be the next Executive Board slot to open up, when Spain’s Luis de Guindos leaves on 31 May 2026.

There is no ‘Iberian seat’ on the Board, so that even if de Guindos’ departure is likely—as we see it—to leave Spain bereft of Board representation, this will not help Centeno more than it will various others who would also like a turn.

It is also worth noting that the ECB vice presidency already went to Portugal once—Vítor Constâncio held the position for eight years up to 31 May 2018.

Could Centeno have a shot at another ECB Board seat? His best hope would be with the departure of Chief Economist Philip Lane, who is slated to exit from 31 May 2027, when Centeno will still only be 59.5 years old, comfortably young enough.

Letting Centeno succeed Lane would be in a sense ideologically more reasonable, given that Lane is also reasonably dovish, though not to Centeno’s extent.

Moreover, Ireland is a small country, so under the informal norm of geographic balance, Lane’s successor is likely to come from another smaller Eurozone country. That would in principle improve Portugal’s and thus Centeno’s chances.

However, a scenario favouring Centeno is not our base case. Rather, we expect a new member state to get the position—a development long overdue.

After that, the next up to leave following de Guindos, Lane and Lagarde will be Isabel Schnabel, whose scheduled end of office is 31 December 2027. The problem here is that Germany—like France and Italy, but unlike Spain—probably will always retain a ‘national seat’ for the foreseeable future. Berlin is not going to give it to Centeno.

Dutch national Frank Elderson has until mid-December 2028, and Italy’s Piero Cipollone until end-October 2031, but that is all far enough in the future that we will refrain from anything but the observation that if Centeno is still waiting for a Board position when the time comes, then his chances have probably dwindled.

Centeno could be forgiven for any difficulties concentrating on the Governing Council’s monetary policy deliberations this Thursday, what with his future in the balance. As clear as it is that he deserves reappointment to his current position, we don’t envision an ECB Executive Board seat for him.