Spain Weighs Running Out Clock on Naming New Central Bank Head

(Bloomberg) -- Spain is looking to refrain from naming a new central-bank governor until after next month’s European Parliament elections — potentially leaving the job vacant for weeks or even months.

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Pablo Hernandez de Cos’s term ends on June 10, a day after the vote, and there’s been no announcement yet on who’ll replace him. His deputy, Margarita Delgado, could then stand in until her own mandate finishes in September, with the government planning to work within that time-frame so as not to make the appointment an election theme, according to people familiar with the process who asked not to be identified discussing private deliberations.

The role of Bank of Spain chief carries with it a seat on the European Central Bank’s 26-member Governing Council, which is at a pivotal juncture as it prepares to lower interest rates that were ramped up to tackle the euro zone’s worst-ever inflation crisis.

One of the people stressed that selecting a successor for De Cos is important, to ensure Spain has a solid presence at the ECB as it eases borrowing costs.

Spokespeople for the central bank and the government declined to comment.

A first ECB rate cut is expected on June 6 — De Cos’s final monetary-policy meeting in Frankfurt. The next decision will come on July 18, though markets don’t anticipate a move then and officials are cagey on the likely path beyond next month.

By waiting until after the elections, Prime Minister Pedro Sanchez would seek to avoid any controversy that may arise should he select someone with ties to his ruling party. The government has traditionally picked the central-bank head, with the main opposition party choosing the deputy. But that’s unlikely to happen this time.

Economy Minister Carlos Cuerpo indicated last week that he’s in no rush to make an announcement, highlighting that Delgado’s term runs until September. He’s said there’s a short list, but has provided no hints on a preferred candidate.

Front-runners are said to include Montserrat Martinez — a board member at Spain’s securities regulator, Fernando Restoy — head of the Bank for International Settlement’s Financial Stability Institute, European Banking Authority chief Jose Manuel Campa, and Oscar Arce — the ECB’s director general for economics. Digital Transformation Minister Jose Luis Escriva has also been mentioned as a contender.

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