Lagarde sets out her stall to MEPs in Economics and Monetary Affairs Committee

Christine Lagarde on Wednesday presented what her priorities would be for the European Central Bank were she to be confirmed as its President.

Throughout most of the morning, Ms Lagarde fielded questions from committee MEPs during a hearing intended to judge her suitability for the post of President of the European Central Bank (ECB).

There were recurrent questions on whether the ECB should prioritise its secondary objectives and better integrate including through a review of its monetary framework, and the need to more effectively integrate fighting climate change into the Bank’s mandate.

MEPs also asked Ms Lagarde how the negative effects, such as extra low interest rates, stemming from the exceptional measures taken by the ECB could be mitigated, especially through its quantitative easing programme, the need to review the ECB’s code of conduct, the role of the Euro as a reserve currency, and how the ECB’s decisions can be better explained to the public.

In her replies, Ms Lagarde agreed that it was time to review the ECB’s monetary framework to address new challenges such as non-bank lending, fintech, crypto currencies, and climate change. She stressed that she would champion climate change becoming a “core concern” for the ECB, given it could pose “macro-critical risks”. Financing the ecological transition would be something all economic actors, including the ECB, would need to prioritise.

Ms Lagarde also said that while the ECB’s quantitative easing had indeed led to certain negative effects, its overall results were positive and that she saw such a “highly accommodative stance continuing for a long time”.

Ms Lagarde told MEPs that communicating and explaining decisions taken to people would be her primary role as future ECB President. “The ECB needs to understand and explain to people, not only the markets”, she said.

You can watch the hearing again here

Next steps

Committee MEPs will vote at 18:00 on whether to recommend Ms Lagarde or not for the post. After this, a plenary vote on her suitableness is expected during the session of 16 to 19 September. It will then be up to the European Council to take the final decision.