Lagarde plans on leaving ECB early to head WEF, Schwab says

Christine Lagarde, president of the European Central Bank (ECB), has been considering stepping down from her post ahead of schedule to take over as chair of the World Economic Forum (WEF), according to Klaus Schwab, the WEF’s founder and former chairman. 

The discussions, which have been ongoing for several years, were confirmed by Schwab in an interview with the Financial Times. He said he visited Lagarde in Frankfurt in early April to discuss the WEF leadership transition.

The plan, according to Schwab, involved him remaining chair until she was ready to assume the role, ideally no later than early 2027.

Living arrangements prepared for Lagarde in Switzerland 

Klaus Schwab told FT that logistical arrangements had already been made for Lagarde to take on her new position at the WEF. An apartment at Villa Mundi, a WEF-owned property overlooking Lake Geneva, had reportedly been reserved for her. 

He explained that this was to give Lagarde a working space as she picked up a greater responsibility within the Geneva-based organization.

In April, accusations from a whistleblower claimed that Schwab and his family had privately used parts of the Villa Mundi complex. The former WEF chairman denied the claim and insisted that the apartment in question was intended for Lagarde, not himself.

ECB responds to Lagarde’s rumored exit

Speaking on the news about her exit, an ECB representative said Lagarde “has always been fully committed to deliver on her mission and is determined to complete her term,” insinuating that she could sit on the central bank seat until the last day of her tenure.

Two individuals familiar with the discussions said there was a mutual understanding between Lagarde and Schwab on a timeline. According to one of them, Lagarde agreed to assume the WEF position only if she could first succeed in reducing inflation to the ECB’s 2% medium-term target. 

Still, the same source noted that Lagarde was “hesitant” during the talks about Schwab wanting her to depart the ECB early.

Should Lagarde step down before her term concludes, she would become only the second ECB president to exit prematurely, following Wim Duisenberg, who resigned in 2003 after being accused of fraud, leading to the collapse of French bank Crédit Lyonnais.

Schwab exits WEF  

Schwab officially stepped down as chair of the WEF board in May against the backdrop of several misconduct allegations made by an anonymous whistleblower. He was originally expected to leave in January 2027, but was pushed out earlier than planned. 

The 87-year-old German engineer had been cleared of separate allegations just weeks prior, but the latest claims suggested that he and his family received inappropriate financial benefits from the Forum, accusations he strongly denies.

“My fear is that if this continues and hangs over the organisation without a solution, Christine Lagarde will not take up the position as chair,” he said in the FT interview. “I don’t want to lose her. I want to make sure what has been built here is not destroyed.”

Lagarde’s ECB tenure could end in inflation crisis

Lagarde has guided the central bank through the global economic fallout of COVID-19, followed by an inflation surge driven by pandemic-related supply shocks and Russia’s full-scale invasion of Ukraine in 2022.

Under her watch, the ECB implemented several interest rate hikes to curb price growth. Inflation in the euro area has since slowed, with the latest data showing a year-on-year increase of 2.2%, close to the ECB’s target.

Though near-term inflation expectations among consumers ticked slightly higher to 3.1% this month, longer-term projections are more stable. ECB staff see inflation aligning with the bank’s 2% goal sometime next year.

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