There are 24 members of the ECB governing council, here’s what we think about how they feel about QE.
The Executive Board:
- Draghi
- Constâncio
- Cœuré
- Mersch
- Lautenschläger
- Praet
Draghi is the only one solidly in favor of buying but Praet is likely in his corner after he said he was confident the ECB would hit a 1 trillion euro balance sheet. Constancio is likely with Draghi but he has some reservations about sovereign QE. These votes are especially important because the governing council sets the agenda.
National central bank leaders:
- Weidmann (for sure against)
- Nowotny (Q1 2015 too soon for QE)
- Liikanen (traditional hawk but no clear position yet on QE)
- Knot (sees no reason to pursue QE now)
These four are the most likely to be against QE.
- Coene (falling inflation can turn into deflation quickly)
- Noyer (‘No problem’ buying govt bonds if needed)
- Visco (Risk of deflation can’t be ignored)
- Linde (Dec data key for ECB to make decision)
- Costa (no position)
- Reinesch
- Makúch
- Bonnici
- Honohan
- Hansson
- Giorkatzi
- Jazbec
- Rimšēvičs
- Stournaras
The top three are almost certainly on Draghi’s side, probably Linde and Costa as well but it’s not yet clear. What’s important about last 9 names on the list is that they don’t really have a strong say on the ECB. They all have votes but some of them come from miniscule economies and others rarely express opinions or can be seen to sway with the consensus.
What’s even more interesting is that the number of votes will drop to 21 next year when Lithuania joins the eurozone on Jan 1. The 5 largest countries — Germany, France, Italy, Spain and the Netherlands—will be pooled together and will have a total of four votes between them on a rotating basis. Those 5 are sharply divided and how the rotation works might be key.
The other 14 countries will share 11 votes. In total, there will be 21 votes.
Bottom line: If you tally all the votes for Draghi and the soft supports and, at best, he probably only has a 9-7 lead. That’s not going to be enough to push through QE.
