EU leaders agree on France's Lagarde to lead ECB

EU leaders agree on France's Lagarde to lead ECB

In one of the longest EU summits in recent years, the leaders are looking Tuesday to name a new president of the EU's powerful executive arm, the European Commission, a president of the European Council and a foreign policy chief.

Investors will likely bet Lagarde will share Draghi's taste for aggressive and innovative monetary policy and her appointment would mean the more hawkish Bundesbank President Jens Weidmann misses out.

While her selection to replace Mario Draghi at the European Central Bank from November is far from certain, diplomatic sources suggest French President Emmanuel Macron has proposed her for the job and that German Chancellor Angela Merkel's response was "very positive".

Ms Lagarde led the International Monetary Fund through the highly controversial bailout of the Greek economy, which almost fractured the eurozone, and has repeatedly called for greater financial risk sharing in the bloc, arguing such steps are essential for it to survive the next downturn.

The French lawyer has been pegged as more of a politician than as an economist, possibly ushering in a new European Central Bank leadership style that departs from the more stoic career economist Draghi.

Lagarde, 63, has blamed the global financial crisis a decade ago in part on testosterone-fuelled greed, once saying: "If it had been Lehman Sisters rather than Lehman Brothers, the world might well look a lot different today".

Although not trained as a economist, Lagarde has spent the past eight years at the helm of the Washington-based International Monetary Fund. Furtehr down, we look into what this could mean for the European Central Bank policy and euro.

"The initial criticism is obvious: no central bank experience, not the top-notch economics education, another former politician at the head of the ECB", ING economist Carsten Brzeski said. She would also become its first female leader.

In 2016, she went to trial in an affair that cost the French taxpayer over €400m following a payment to a French tycoon during her time as a finance minister. While judges said her failure to contest a 400 million euro state settlement led to a misuse of public funds, she escaped punishment and the IMF board reaffirmed her in her post.

She is also not without controversy. -China trade war and vowed to maintain the IMF's lending firepower - about US$1-trillion - so it could backstop any scenario.

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