MNI: Bank Of Spain Chief Escriva Seen As Consensual, Dovish

MNI (ROME) - Incoming Bank of Spain Governor Jose Luis Escriva is seen as more dovish than his more centrist predecessor Pablo Hernandez de Cos, but is likely to take a collegial approach to monetary policy discussions on the European Central Bank’s Governing Council, sources in and outside Spain told MNI.

While his nomination surprised many given that he will arrive directly from a role in government as minister for digital transformation and the civil services, he comes well prepared, having started his career at the Bank of Spain before serving as head of the ECB’s Monetary Policy Division from 1999 to 2004. He was chief economist at BBVA from 2004 until 2010 before returning to the public sector as head of Spain’s Independent Authority for Fiscal Responsibility, to which he was appointed by the then conservative government.

As an influential member of the Socialist government of Prime Minister Pedro Sanchez, Escriva has overseen a reform of the pension system and the introduction of a minimum basic income, the latter being publicly criticised by De Cos for its “lack of sophistication.” The former Bank of Spain governor also clashed with the government over increases in the minimum wage, which he argued could increase unemployment. 

Now that he has been named governor Escriva may have to express opinions on his own pension reform, one source noted. Escriva was on the more moderate wing of Sanchez’s administration, and had admitted the danger posed by excessive wage rises for employment.

His appointment came without the agreement of the centre-right opposition People’s Party, breaking a tradition of seeking consensus over the top job at the Bank of Spain.

EXPERTISE

“No one currently outside the ECB is more suited for a role on the Governing Council,” said one senior Eurosystem official, noting how former ECB chief Wim Duisenberg had relied on his expertise. Still, the appointment was a surprise, given the lack of political agreement in Spain, the official said.

A former ECB official pointed to Escriva’s strong CV, as well as to his collegial approach to policy making, though he added that rival candidates, such as hedge fund manager Angel Ubide, might have made a bigger impact in Frankfurt. (See MNI SOURCES: ECB Neutral Debate Heats Up As Growth Weak)

Escriva’s reasoned and consensual approach helped overcome breaches between Sanchez’s Socialist Party and its far-left junior partner Sumar, and he was on the shortlist for replacing Nadia Calvino as economy minister early this year.

But not everyone is happy that he will become governor.

“If the opposition starts calling it Escriva’s Bank of Spain, as has been the case with other independent jobs, it could harm the institution’s credibility in the country,” said one Spanish source critical of his appointment.

The Spanish government will point to other examples of national ministers transitioning to central banking such as Bank of Portugal chief Mario Centeno, and also ECB Vice President Luis de Guindos, Spain’s conservative former economy minister.

(Additional reporting by Les Commons in London and David Thomas in Brussels)