Netherlands puts Klaas Knot forward, leaving a two-way race to lead the European Central Bank

The nomination process for the presidency of the European Central Bank closed on Friday, with former Dutch central bank chief Klaas Knot entering the race^7,8. European governments are now set to choose between two candidates: Knot and Spain’s Pablo Hernández de Cos^1,3. Euro zone nations nominated the two central banking veterans on Friday to succeed Christine Lagarde^2,17.

Spain had already put forward Hernández de Cos, the general manager of the Bank for International Settlements^6,13.

Both men are former heads of their countries’ central banks¹⁰. Hernández de Cos led the Bank of Spain between 2018 and 2024¹⁶ and now heads the Basel-based BIS⁵. Knot and Hernández de Cos were already considered the leading contenders¹².

Why it matters to investors

The ECB presidency is becoming vacant earlier than expected⁵. Lagarde will leave on 7 February¹⁰, stepping down early from the bank’s top job¹⁹.

The handover comes as the ECB weighs another move on rates. Lagarde has said data will tell whether a rate hike is needed in December, after the bank held rates steady at its last meeting²⁰. The ECB is looking at indicators to see whether a hike will be warranted next month²⁰.

The contest has been framed as owl against hawk¹⁸. Hernández de Cos has made moderation his banner and taken Lagarde as a reference, in one portrait of the race¹⁸. Spain’s government made the nomination⁶, while the Netherlands nominated Knot^14,17. With only two names on the list, the choice probably comes down to the Dutchman and the Spaniard³.

What to watch

The decision now rests with euro-area governments¹. Italy is not yet taking sides between the Spanish and Dutch candidates, officials from Prime Minister Giorgia Meloni’s office said on Friday^4,9. Rome’s position is one of several that will shape the outcome^14,15.

Investors will watch how the large member states line up behind the two candidates in the coming weeks, and whether either candidate sets out a view on the December rate decision that Lagarde says the data will settle^11,20. Lagarde’s tenure is already under review as she prepares to leave early, with commentators asking how well she did¹⁹. The winner will take over a central bank whose presidency falls vacant on 7 February¹⁰. Until then, the two-candidate shortlist set on Friday⁸ frames the debate over who will lead euro-area monetary policy.