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Spain is set to appoint government minister José Luis Escrivá to lead its central bank, filling a three-month vacancy with a candidate whose selection is likely to infuriate the conservative opposition.
Escrivá, formerly a central bank official and head of Spain’s fiscal watchdog, will be unveiled as the new governor by the Socialist-led government on Wednesday, according to two people familiar with the matter.
The move means Prime Minister Pedro Sánchez will override the objections of the conservative People’s party and eschew the tradition of the government and opposition striking a deal on a new governor and deputy governor.
The custom was established to insulate Bank of Spain governors from subsequent political criticism. But enmity between the two parties, spanning issues from immigration to an amnesty for separatists, has hit new levels under Sánchez and prevented any accord.
“This decision means the central bank governor will be initially perceived as partisan and not as independent, and that is a very bad thing,” said a senior central bank official.
Carlos Cuerpo, Spain’s economy minister, is due to announce Escrivá’s appointment in congress on Wednesday. Escrivá is a combative figure who has been minister for digital transformation and the civil service since the end of last year and was previously pensions and immigration minister.
The governor’s job has been vacant for almost three months since former bank head Pablo Hernández de Cos, who was appointed by a PP government on its last legs in 2018, stepped down in June at the end of a six-year term.
The following month, Sánchez pitched Escrivá for the job, saying: “I believe that there are few people in Spain who have the accredited experience in monetary policy that [he] has.”
A PP official said at the time that it was “not going to allow” his appointment, but in reality the opposition has no power to stop it. Bank of Spain governors do not need to be approved by lawmakers.
Escrivá will automatically become a member of the European Central Bank’s rate-setting governing council at a sensitive time. His appointment comes ahead of its policy meeting next week, when it is widely expected to cut interest rates in response to slowing eurozone inflation.
The ECB in June started bringing down borrowing costs for the first time in five years, lowering its benchmark deposit rate from 4 per cent to 3.75 per cent.
It looks set to cut this again to 3.5 per cent on September 12 after eurozone inflation dropped from 2.6 per cent in July to a three-year low of 2.2 per cent in August, taking it closer to the ECB’s 2 per cent target.
Pilar Alegría, the Spanish government’s spokesperson, would not confirm its chosen candidate on Tuesday but said the central bank would be led by figures of “absolute integrity”.
Spain’s unwritten rule that the government and opposition usually agree on the appointment of the central bank governor and the deputy dates back to 1994.
This tradition was broken only once, in 2006, when José Luis Rodríguez Zapatero’s Socialist government appointed former minister Miguel Ángel Fernández Ordóñez despite opposition objections. Ordóñez was widely criticised for his handling of Spain’s financial crisis and the €19bn nationalisation of Bankia.
There have been other instances of European governments appointing sitting government ministers to run their central banks, although some countries, such as Italy, impose a “cooling-off” period before such moves take place.
Austria recently nominated economy minister Martin Kocher to take over as governor of the Austrian National Bank when its current head, Robert Holzmann, steps down next year.
The Bank of Spain declined to comment.