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Germany Proposes Schnabel as ECB Board Member, Sueddeutsche Says

Jana Randow and Craig Stirling

(Bloomberg) -- German Finance Minister Olaf Scholz plans to put forward Isabel Schnabel for the vacancy on the European Central Bank’s Executive Board that opened up after the resignation of Sabine Lautenschlaeger, according to Sueddeutsche Zeitung.

Schnabel, 48, has served as an economic adviser to Chancellor Angela Merkel’s government since 2014. She was considered a lead contender for the job, along with Bundesbank Vice President Claudia Buch.

While Germany doesn’t have an explicit right to the board position, it is widely expected to be granted it as the euro area’s largest economy. A finance ministry spokesman declined to comment on the report. Schnabel didn’t immediately respond to a request for comment.

The appointment will have to be approved by euro-area finance ministers, European lawmakers and eventually heads of state, in consultation with the ECB. It comes at a time of unusually heightened dissent among policy makers. ECB President Mario Draghi’s term ends on Oct. 31 after eight years of unprecedented monetary stimulus, and his latest decision to cut interest rates and restart large-scale asset purchases contributed to Lautenschlaeger’s decision to resign early.

Those expansionary measures have long stoked anger in Germany, with politicians alleging they erode savings and harm rather than help the economy. Schnabel’s task will be to help reconcile Germans with the ECB and its policies -- something she has attempted before on Twitter.

It’s a challenge the expert on bank supervision and regulation is well equipped to meet. She is a professor of financial economics at the University of Bonn, an institution that has often featured in the formative years of German monetary policy makers. Lautenschlaeger studied law there, and Joerg Asmussen, an earlier German member of the board, as well as current Bundesbank President Jens Weidmann, were taught economics by former Bundesbank chief Axel Weber.

She would also be joining the ECB just as pressure mounts on governments including Germany to add fiscal stimulus to accompany the monetary support. Schnabel, questioned on the need for a budget boost in her country in May -- before more evidence of a deteriorating economy had emerged -- seemed unconvinced at the time.

“Fiscal policy at the moment is relatively loose, so I wouldn’t worry about this too much,” she said on Bloomberg Television. “The German economy is doing still relatively well, so we are not approaching a recession.”

Schnabel’s appointment would put two women on the six-member board, including incoming President Christine Lagarde, up from one during Draghi’s reign. There are also no women currently in the rest of the Governing Council, which totals 25 officials including the board and national central bank governors.

The lack of gender balance at the top of the ECB has long been an embarrassment to the institution. The European Parliament delayed the ratification of Executive Board member Yves Mersch in 2012 as part of an effort to cajole euro zone governments into fixing the matter.

--With assistance from Piotr Skolimowski.

To contact the reporters on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net;Craig Stirling in Frankfurt at cstirling1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Paul Gordon

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