The race to run the European Central Bank is starting to look like a deal rather than a contest.
France has signalled it may support Pablo Hernández de Cos, the former governor of the Bank of Spain and current general manager of the Bank for International Settlements, to take over from Christine Lagarde. Lagarde is leaving early, in February. Paris's support matters: without France and Germany behind a candidate, nobody gets the job. With both, the main rival, the Netherlands' Klaas Knot, looks increasingly isolated.
ECB top jobs are rarely filled one at a time, and this one is no exception. The outline now circulating would trade three posts on the bank's six-member Executive Board.
Hernández de Cos would get the presidency. France would give up its claim to the powerful chief economist role, which Philip Lane vacates next May. Germany would take that post, with Princeton economist Markus Brunnermeier the name most often mentioned and former IMF official Tobias Adrian also in the frame. In return, a French candidate would take the market operations portfolio held by Isabel Schnabel, who is leaving for the IMF. Laurence Boone, a former French Europe minister and ex-OECD chief economist, is the leading name.
That last piece has raised eyebrows in central banking circles. Market operations is the desk that would buy government bonds in a crisis. Under this package a German professor would set the bank's economic analysis, while a French official ran the purchases that would matter most for France's own debt. With French bond spreads already elevated this autumn, critics question whether Berlin has fully thought through that trade.
The German government has denied reports that Friedrich Merz and Emmanuel Macron have already agreed. People familiar with the talks say nothing is final. But the direction is clear, and the leaders' meeting in Dublin today gives both men another chance to close it. Spain's Pedro Sánchez and the Netherlands' Rob Jetten are not expected to attend.
The formal route is longer. The Eurogroup recommends a candidate, the European Parliament and the ECB's Governing Council give opinions, and EU leaders appoint by qualified majority. In practice, though, a Franco-German package that also satisfies Madrid usually decides the outcome.
Hernández de Cos has broad support among southern member states and a long record in banking supervision, including chairing the Basel Committee. France reportedly sees him as more open to commitments on the bank's direction than Knot, a former Dutch central bank governor associated with the hawkish camp. For Germany, the chief economist role is the real prize: it shapes the analysis behind every interest-rate decision.
The package also reflects geography. Southern Europe already holds several of the bloc's top financial posts, including the presidency of the Eurogroup, held by Greece. A Spaniard at the ECB would tilt the line-up further south, which helps explain why Berlin wants the economics brief in return.
Europe's most powerful economic institution is being staffed by bargain, as it usually is. That is not new. What matters is the balance the deal strikes: a southern president, a German hand on the economic analysis, and a French official on the bond-buying desk. Markets will read that mix closely, especially if France's fiscal troubles deepen. If Merz and Macron settle it in Dublin or soon after, the Eurogroup could move this month and Lagarde's successor would be in place before she leaves in February.
