What can the Eurogroup do to promote gender diversity at the ECB?

Last week, President of the Eurogroup, Mario Centeno, acknowledged the problematic lack of gender balance in the ECB but wrongly claimed that legal restrictions are preventing the Eurogroup to improve the situation.

A picture is worth a thousand words. Two weeks ago, the new ECB President Christine Lagarde tweeted a picture of the ECB’s Governing Council off-site retreat in a castle close to Frankfurt made the rounds on twitter. In the picture, one could quickly notice a shocking fact: among 25 persons circling the table, Mrs Lagarde was the only woman (well, actually no: there are two more ladies in the paintings hanging on the walls…).

The lack of gender diversity in the ECB’s Governing Council is a long-standing issue. Since 2012, the European Parliament has been actively denouncing this failure, and as a tentative solution, have repeatedly called on the Eurogroup to establish a balanced shortlist of at least two candidates (one man, one woman) for all appointments to the ECB’s board. Positive Money Europe also promoted this proposal ahead of the last key appointments early 2019. But so far nothing has been done to implement this best practice.

The issue of gender balance at the ECB is the tip of a much bigger problematic iceberg: the lack of diversity of political views; social backgrounds, and other minority groups within central banks. Perhaps more than any other institution, central banks are particularly undiverse organisations, which makes them vulnerable to groupthink phenomenon and a culture that is less prone to self-criticism and open-mindedness. 

Several commentators speculated that Christine Lagarde’s intention by tweeting the picture was purposefully meant to attract attention to the shocking lack of gender diversity in the ECB’s top policymaking body. 

Either way, it indeed resulted in a lot of debate on social media. But also in the EU institutions. Last Monday, the picture was even brandished by MEP Luis Garicano during a parliamentary hearing with the Eurogroup chair Mario Centeno. 

 

In his preliminary remarks, Centeno said:

“I am well aware of the European Parliament’s call for the Eurogroup or Council providing ‘shortlists’ of candidates, and I do understand the reasoning behind this request. The selection process is, as you know, clearly specified in the Treaty, and that includes the involvement of the different institutions in a specific sequence. There is no scope nor legal grounds for improvisation here. On my part, I have chosen to be fully transparent about the candidacies that are put forward by the euro area Member States. These are communicated shortly after the deadline for proposing candidates closes. I am also aware of the European Parliament has repeatedly stressed the importance of improving gender balance. I very much share this concern and point this out to finance ministers each time I launch a call for candidates in the Eurogroup. I am optimistic though that Member States will take the issue of gender balance very seriously in future appointments.”

As far as we can recall, it is the first time that the Eurogroup chair directly comments on the shortlist proposal. As such it is positive that the debate is making headways. However, Centeno’s response remains broadly unconvincing. In particular, Centeno’s claim that “there is no scope nor legal grounds for improvisation”  in the appointment procedure is vastly wrong. 

Article 283.2 defines the rule for appointing ECB board members: 

The President, the Vice-President and the other members of the Executive Board shall be appointed by the European Council, acting by a qualified majority, from among persons of recognised standing and professional experience in monetary or banking matters, on a recommendation from the Council, after it has consulted the European Parliament and the Governing Council of the European Central Bank.

If one were to follow strictly Art. 283 TFEU, only the European Council should be involved and not the Eurogroup, which is not even mentioned.

But in fact, it’s an open secret that it is behind the closed doors of the obscure Eurogroup that the horse-trading negotiations about those appointments are often being carried by finance ministers. As Mr Centeno openly mentioned during the hearing, he is in charge of planning the appointment process, including by setting up “deadlines” for the submission of candidates. 

In other words, by making the Eurogroup a pivotal body of appointments process to the ECB, we are already “improvising” around the law. 

In our report examining the role the European Parliament in scrutinizing the ECB, we already noted that “the content and extent of the consultative role of the Parliament in appointing ECB board members remains a matter of interpretation.” The same conclusion holds true in the case of the Eurogroup.

As President of the Eurogroup, Mr Centeno’s main task is to set up the agenda of the meetings, to chair the meetings, and communicate publicly about their outcomes during press conferences. Hence, there are at least three ways in which Mr Centeno can act more decisively:

• Postponing the deadline for candidacy to ECB board until several names (including a man and a woman) have been submitted. 
• Amending the Eurogroup’s working methods to clarify rules for appointing board members to the ECB, including a gender balance diversity criteria.
• Has a finance minister himself, the Eurogroup chair may as well submit further candidates in the (recurring) case where only one name has been proposed. Noteworthily, it is not an obligation for ministers to nominate candidates from their home country.

However, this is clearly insufficient, as the Eurogroup is only involved in the appointment of the members of the Board, which counts for 6 out of 25 members of the ECB’s Governing Council. The 19 other members are governors appointed directly by each member state, according to their own national legislation.

This is why concerted action is required by all member states to ensure that all countries make an effort in appointing women as governor of their respective national central banks. But once again, the Eurogroup is not completely powerless.

The President of the Eurogroup (ideally together with the President of the European Council) could propose an intergovernmental agreement under which all Eurozone member states would commit to ensuring the Governing Council will be composed by 2025 of at least one third of women (ie. 8 women). Given than 18 seats in the Governing Council will be renewed from now until 2025, this objective is completely feasible.

Under such agreement, if member states do not appoint enough women in their national central banks, it would bind the Presidency of the Council and the Eurogroup to take action in ensuring this gap is being  (partly) compensated by appointing more women in the Executive Board.

Increasing gender parity in the ECB’s Governing Council is not just a laudable aim, it is vital to ensure the ECB’s top decision-making body is not grotesquely unrepresentative of society. The presupposed rigid legal framework of the EU Treaty is not a good reason to justify inaction, and even less to hide the lack of political will to act.