Christine Lagarde, Christine Madeleine Odette Lagarde - France News

Christine Lagarde will raise the profile of the European Central Bank, making it a more politically-savvy institution that takes its message directly to the people. However policy innovation, the trademark of her predecessor, may be relegated. In return, Lagarde may be able to use her considerable diplomatic skills to persuade Germany to help temper a euro zone slow-down by raising its spending levels – a feat outgoing ECB chief Mario Draghi failed to achieve. Facing a protracted crisis, Draghi and his team of highly-trained monetary policy-makers have essentially devised the world’s biggest experiment in unconventional policy over the last five years. Weak growth suggests the stimulus path must be pursued, even as the limits of its existing tools are nearing. With little training or experience in monetary policy, Lagarde, who takes over from Mario Draghi on Nov 1, will be the arbiter and not the driver of the policy innovation that is now needed, putting a greater burden on Philip Lane, the ECB’s new chief economist, and the bank’s staff. “The question is whether the monetary policy brain drain with the departures of (former chief economist) Peter Praet, (former vice president) Vitor Constancio and Mario Draghi will be equally replaced or whether Philip Lane might soon be the last pragmatic monetary economist standing in the ECB’s Executive Board,” ING economist Carsten Brzeski said. Draghi, himself a PhD economist who wrote a dissertation at the Massachusetts Institute of Technology (MTI) on economic theory and its application, has in contrast been the…

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