Economy

Our man in Frankfurt: ‘green’ central banker Elderson on his way to the ECB

50-year-old Elderson is almost working throughout his career for De Nederlandse Bank (DNB). That career gained momentum in October, then successively the Eurogroup and the ECB agreed to his candidacy.

Within the ECB itself, enthusiasm about Elderson’s candidacy was not very great. President Christine Lagarde wants more women in the top of the central bank.

Dominated by men

In addition to the Frenchwoman, the six-member board also includes the German Isabel Schnabel, the central bankers of the 19 member states are all male.

And that has to change, said Lagarde recently in an interview with the New York Times in which she refers to the photo below of an ECB meeting in 2019.

In the European Parliament, there was also resistance to Elderson’s candidacy. And that was again not against him personally, but because parliament also wanted a female candidate. Still, the Economic and Monetary Commission passed earlier this month.

The plenary vote in parliament on Monday is therefore a formality, also because parliament has no right of veto over the appointment itself.

Elderson probably owes the positive advice of the parliamentary committee to his strong opinion on sustainability. For years, he has been hammering within and outside DNB of the responsibility that the financial sector must take in making the economy more sustainable.

Big risks

This is necessary to tackle climate change. “If we don’t, there will be such great risks as a result of climate change that they will affect the financial sector again,” he said in an interview in honor of his election as number 4 on the Faithfully Sustainable 100 of the newspaper of the same name.

This pioneering role in the field of climate goes beyond fine words. Elderson has been involved in sustainability and climate in various additional positions since 2016. For example, he is the chairman of a worldwide network of central banks that strives for the greening of the financial system, Called NFGS.

He has had turbulent years in his most important task, banking supervision. Two of the largest banks in the Netherlands did not have their affairs in order with regard to the prevention of money laundering practices.

Duties of pastor

Exactly what Elderson will do at the ECB is not yet clear. But it goes without saying that he will take over the legal portfolio from his predecessor, the Luxembourger Yves Mersch.

But that may not apply to all of Mersch’s tasks. The European Parliament’s dissatisfaction with the fact that no woman is being appointed may play a role in whether Elderson will take over from Mersch as vice-chair of the ECB’s Supervisory Board.

The European Parliament may also vote on this, and it does have a right of veto, unlike in the plenary vote on the appointment on Monday. The vote could well be used by parliament to show its muscles, a source at the ECB expects.

Originally a lawyer

Elderson studied law at the University of Amsterdam and received his master’s degree from the renowned Columbia Law School. Legal heavyweights such as Barack Obama’s Attorney General Eric Holder and the recently deceased Ruth Bader Ginsburg, judge of the US Supreme Court, also studied there.

After graduating in 1995, Elderson himself went to work at Zuidas law firm Houthoff. After four years he left for DNB, where he worked as director of the Legal Affairs department and was responsible for the department that supervised ABN Amro. In 2008 he became General Counsel, the principal lawyer at DNB. He joined the Board of Directors on July 1, 2011, the same day that Klaas Knot became president.

Lower salary

With his appointment as a member of the executive board of the ECB, Elderson passes his current chief up the career ladder for central bankers. However, this does not apply to the salary, based on the salary slips of DNB and ECB in 2019. Klaas Knot then earned 395,023 euros, Elderson 322,731 euros.

By working at the ECB, he even gives up salary. Predecessor Mersch received 291,384 euros in 2019, and Elderson will therefore receive such an amount. The ECB will not increase his salary so that he continues to earn the same, spokesman William Lelieveldt assures.

The central bank will pay him an allowance for finding a home, and care and education for his children if necessary.

Two votes for the Netherlands

That the Netherlands will have a representative at the top of the ECB again after a long time is in any case good news, according to Sylvester Eijffinger, emeritus professor of Financial Economics. The bank’s decisions are taken by the board of directors and the 19 governors of the national central banks. That way, the Netherlands has two voices, Eijffinger explained earlier: those of Knot and Elderson.

This can be useful when it comes to determining the policy of the ECB, where Elderson is appointed for a term of eight years. For example, interest rates have been very low for years to stimulate the European economy. The downside of this is that (Dutch) pension funds are getting stuck.

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