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Lagarde says "I hesitated in ECB work"

Lagarde wanted the old position as IMF chief and is not sure if he could serve a new role. (AFP image)

Frankfurt: Christine Lagarde did not jump right in to succeed Mario Draghi as president of the European Central Bank (ECB), but he needed it convincingly.

This is what the former head of the International Monetary Fund (IMF) revealed to Francis Lacca in New York this week in an interview with Bloomberg Television that also offered insights into her likely management style, and even the inspiration she draws from the pope. . Here's a selection of some of the highlights.

I hesitated

Lagarde, 63, took over the ECB presidency in July after a long-running row between European Union (EU) countries over the region's key roles.

She hesitated because she wanted her old position and was also unsure whether she had agreed to conduct monetary policy in the world's largest currency area.

"Everyone assumed: oh, she's never been a central banker, how can she do that? I'm not an idiot and I don't have enough vanity to assume that I can do something. So I talked to a lot of people who were central bank managers, whom I trusted, who knew the job.

"And everybody supported me, and everybody confirmed that yes, under the current circumstances, and given the strength of the institution and the situation we are in in Europe, I had to say yes."

Lagarde's voices also left her convinced that the nuts and bolts of monetary policy would not be the most important aspect of her role.

"The point that I was told very clearly, and that I also believe, is that a lot of diplomatic skills, political sense, understanding of the perspectives of the finance ministers and the leaders of the eurozone countries, it will all be more important than deep-seated, rooted experience in the market for determining monetary policy ”.

With that in mind, she said she will rely heavily on the people surrounding her at the ECB to guide her agenda.

This may include one person in particular, chief economist Philip Lane, whom she mentioned.

"There is such a strong and intelligent and powerful staff in the institution that I will get the right support, the right expertise. There is a fantastic member of the Board of Directors, Philip Lane, who was himself a former Governor of the Central Bank of Ireland and the board members are talented in their views. “

Team work

In just over a month, Lagarde will take charge of an institution that will step back from an unprecedented dispute over a policy to extend quantitative easing.

Governors have been pushing the issue to the public, and one member of the Executive Board, Sabine Lautenshauer, later resigned.

Lagarde hinted that he might try to bring the discipline back.

"You are only strong and convincing if you are strong at home. So to make sure that we are a team, that we disagree with each other and then, once the disagreement is resolved, after a common line has emerged, we all move in together, I think it has a huge impact. "

She also shared her views on engaging with colleagues.

"Listen enough to put yourself in the other person's shoes, and then you understand her or his perspective, their perspective, where they can move, where they cannot move, what difficulties they are facing."

Bad memories

Although not a central banker, Lagarde is still a crisis-hit veteran, not only of the 2008 financial emergency, but also of the sovereign debt turmoil that has plagued Greece and the eurozone.

She remembers a moment in 2010 when "many of us thought the euro was gone."

"The G7 was going on and I was on the phone and in the room and I was leaving the room to talk to G7 colleagues. And you know, we watched the clock move, the Sydney markets opened, the markets opened in Tokyo, Hong Kong, I think it was like – we need to come up with something. "

Work to be done

Lagarde says the region may need to raise more budget resources in the future to protect the integrity of its currency.

"More needs to be done, many times you have heard, to end the banking union, to make sure that there is a deeper and wider European security market, with enough fiscal space in common, but you say but it can be used to to stabilize. "

Divine inspiration

Lagarde was asked to name a leader that inspired her during her time at the IMF.

"Pope Franjo is not necessarily a financial actor, he is not a market maker, but in terms of leadership he commands tremendous respect and obviously has his own spirituality, which I think I share.

"But he also has a social vision that I share in many respects, not all, but in many respects. I admire him a lot. "

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