Isabel Schnabel, the other face of the ECB, with “very important” influence

It is not her who will be the center of attention this Thursday. As usual, it will be up to Christine Lagarde to go up behind the desk and explain the decision of the European Central Bank (ECB) which she chairs. An unenviable role in a context where the institution is under pressure to fight against inflation that is reaching records and prevent a recession that promises to be almost inevitable.

In the wake of the French, appears more and more clearly another personality: Isabel Schnabel. On Twitter, in the media, among young people, the German economist, who joined the ECB Governing Council in 2020, is everywhere to propagate and popularize the mission of the ECB. To make it audible to the Germans, a significant fringe of which is still very critical of his actions.

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It is “one of the most important figures of the ECB”, confirms Frederik Ducrozet, chief economist at Pictet Wealth Management. In a context where the president of the institution is not an economist, the fact that Isabel Schnabel is, in addition to being German (even if as a member of the management board she does not represent her country), is crucial . “She has a very important influence, which goes beyond her position within the executive board”, estimates the expert, who met him on several occasions.

More convincing

And to cite an example: “When Christine Lagarde or others announce that the ECB is working on an anti-fragmentation plan [dont le but est d’éviter un écartement trop important des rendements des obligations des différents pays de la zone euro, ndlr], the markets and the experts have doubts. Then, when Isabel Schnabel evokes the same plan, perhaps with a little more vigor, during a speech at the Sorbonne, the markets listen to her.

Isabel Schnabel arrived at the ECB in a completely different context: at the beginning of 2020, the specter of deflation was still feared and the pandemic had not yet shaken the world economy. She then replaced her compatriot Sabine Lautenschläger exasperated to the point of leaving two years before the end of her mandate.

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His career began with an apprenticeship at Deutsche Bank in his hometown of Dortmund. It was then that she left to study economics in Mannheim, then at the Sorbonne and at Berkeley. She then did her doctorate in Mannheim where she began to teach, before going to Bonn and Mainz. Member of the group of five sages who has been advising the German government since 2014, she specializes in financial economics. 51 years old, married to an economics professor, mother of three daughters, the eldest of whom is preparing to study economics, she has already said on several occasions that she would never have given up on having children. In the women’s magazine Brigitte, she says she was commuting with her third six-week-old daughter between Bonn and Mainz (1h23 by train). She admits to having reached her limits but points out that since then she has never found the daily trips tiring.

Omnipresent on Twitter

Her peers are full of praise for her: “Isabel Schnabel is a highly respected voice in the international central banking community,” said Andréa Maechler, number three at the Swiss National Bank (SNB). His expertise covers a wide range of fields. His analyzes are sharp and relevant, in tune with current events.” “An excellent economist, she also brings a lot through her personality,” adds the Swiss central banker, who considers her to be “someone who is very open, who seeks exchanges with her peers and offers new perspectives, which she done thoughtfully. These are valuable assets in a global environment as complex as the one in which we currently live.”

Excellent, open, but also “a very natural person”, abounds Stefan Gerlach, chief economist of the EFG Bank in Zurich, who rubbed shoulders with him. This undoubtedly comes from his academic background, he continues. In this world, there is a form of level playing fieldwhere everyone can present an idea, whereas the world of central bankers is much more hierarchical.

Read also: Will the fight against inflation plunge the West into recession?

The presence on the social networks of the one who is also committed to equality issues is well seen: “She does a good job with her comments on Twitter, believes Stefan Gerlach. Managing the flow of information, explaining, is increasingly important for central bankers.” Christine Lagarde also has her Twitter account, with a number of followers 25 times greater, but her communications are managed by her communications team. Her proximity, her direct interaction, since she often responds to colleagues or students, and her pedagogy are also underlined by Frederik Ducrozet, who recalls that it is all the more important since the critics come mainly from Germany. “Inflation does not come from negative rates, nor from the ECB having been too lax with quantitative easing policies, otherwise it would have appeared much sooner. It is important to explain that this comes from the disruptions in the economy linked to the pandemic and the war in Ukraine”, continues the Pictet economist.

And to explain it to all audiences: whether it’s Dein Spiegelthe youth equivalent of the magazine Spiegelor a Jung & Naiv show, from a well-known youtuber across the Rhine, where she has to answer questions from listeners live for 2h30, “it’s worth dozens of specialized interviews if it makes it possible to convince the general public German,” emphasizes Frederik Ducrozet.

Which is not the case with Picture, which is rarely in the lace. Last April, the German boulevard daily published the photo of Isabel Schnabel and Christine Lagarde with the following accusation: “They impoverish us but enrich themselves.” The logic? Inflation is rising, penalizing consumers, who are also suffering from negative rates and the quantitative easing policy. During this time, the latter boosted the shares and allowed the two managers, who hold investment funds and shares, to enrich themselves, choked the Bild.

Approached at the Bundesbank

It was the second time that the daily attacked the two (only) women of the Governing Council of the ECB (as well as the head of the World Bank). The other 23, who in any case have no less power than Isabel Schnabel, are men. This organ has six members of the Executive Board of the ECB and the governors of the central banks of the 19 member countries of the euro zone. In 2021, when the German appeared as one of the possible replacements for Jens Weidmann at the head of the Bundesbank, the Picture headline: “The Germans should tremble before this woman”. If Isabel Schnabel cherished the dream of becoming President of the ECB afterwards, the path would thus have been traced and many consider that she would be in her place. But it’s finally Joachim Nagel who was appointed to this position.

Read also: Patrick Artus: “The ECB must now avoid a eurozone crisis”

Despite all the attacks by Bild and others, one should not believe that this banking specialist is a “dove”, as one describes in the language of central bankers those who are in favor of expansionary monetary policies. If it is not virulent like certain compatriots with regard to the ECB, it would nevertheless line up rather on the side of the “hawks” who hold inflation as the absolute evil. With this exception: “She is an excellent economist, respected and pragmatic. When there is a risk of inflation being too low, she also understands that action must be taken. But now that prices are soaring, she is the first to push for a rate hike. Moreover, it is no coincidence that she is one of those who want an anti-fragmentation tool. It is precisely to be able to raise interest rates more quickly,” explains Frederik Ducrozet. If the ECB finally opts for an increase of 50 basis points on Thursday (and not 25 as it had pre-announced), Isabel Schnabel will therefore have something to do with it.

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