European Central Bank Executive Board member Isabel Schnabel will leave her post ahead of schedule, a move expected to intensify the race for senior positions including a successor to President Christine Lagarde.
The German-born Schnabel announced on Thursday that she will depart the ECB's Executive Board in January, one year earlier than her original term was due to end. That means a vacancy will open up in the central bank's top decision-making body in just over three months.
Chief Economist Philip Lane and Lagarde will also see their terms expire in succession in 2027, and Lagarde has hinted she could step down early, raising the odds that countries will try to strike a package deal covering multiple posts.
ECB President Christine Lagarde (left), Isabel Schnabel and Philip Lane still have three EU leaders' meetings remaining this year that could serve as venues for political horse-trading.
Berenberg chief economist Holger Schmieding said there is now real time pressure and all sides need to come up with a solution.
The timing of the personnel talks, however, is far from ideal. Germany's government has been plunged into crisis after a series of state election setbacks, France faces a political deadlock ahead of its elections, and Italy and Spain will also hold national votes in due course. That raises the risk of the ECB's staffing arrangements becoming bogged down in stalemate.
In a farewell letter to ECB staff, Schnabel said her successor will be appointed by the European Council, and that if necessary her responsibilities will be shared temporarily among other Executive Board members after she leaves.
Time pressure is also coming from the French presidential election. France's vote begins in April next year, and if the ECB personnel negotiations drag on without a result, the two political agendas could overlap.
At the same time, uncertainty remains over whether Lagarde will leave before her term expires at the end of October next year. After speculation that she might move to head the World Economic Forum, she only committed to staying on until the end of this year. Lagarde is also due to publish a memoir in January.
Dutch Prime Minister Rob Jetten said in an interview on Thursday that many euro-area countries would regard former Dutch central bank governor Klaas Knot as a "very suitable candidate." A day earlier, Spanish Prime Minister Pedro Sánchez threw his support behind Bank for International Settlements general manager and former Spanish central bank governor Pablo Hernández de Cos, citing his leadership, ability and expertise.
Jefferies economist Modupe Adegbembo said discussions among countries appear to have already begun, and Schnabel's early departure will further increase pressure on member states to reach a deal as soon as possible.
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