Spain’s De Cos Is Poised to Succeed Carstens as BIS Chief

(Bloomberg) — Pablo Hernandez de Cos, a former governor of the Bank of Spain, is poised to succeed Agustin Carstens at the helm of the Bank for International Settlements, according to people familiar with the matter.

The 53-year-old can draw outright or tacit support from officials in Europe, Latin America and the US, setting him firmly on track to win approval for the post of general manager, said the people, who declined to be identified because talks on the matter are private.

If successful, De Cos would take up the job in July for a renewable term of up five years, making him the second Spaniard to lead the so-called bank for central banks.

That would exchange his pulpit in Madrid — where he pressed the government for pension reform and fiscal consolidation — for one in Basel — where he can continue the BIS’s self-perceived role as an early warning system for the global economy.

De Cos and the BIS declined to comment. 

In the wake of the 2008 financial crisis, the institution pushed for the use of more so-called macro-prudential tools to better manage cycles. This year, its officials warned indebted governments that they’re vulnerable to a sudden loss of market confidence.

“In an area such as financial stability policy, which by its very nature involves monitoring the build-up of conditions that cause crises, it is important that the international community is served by an international institution that is prepared to challenge market and policy making consensus,” Andrew Baker, a professor at Sheffield University, wrote in a book chapter on the BIS in 2020.

Carstens has sought to build a higher profile for the BIS than that practiced by Jaime Caruana, another former Bank of Spain chief who led it until late 2017. He has also expanded its role of fostering global monetary and financial cooperation into areas such as digital currency research.

Even so, the BIS, whose foundation in 1930 makes it the world’s oldest international financial institution, remains publicity-shy, with meetings held strictly behind closed doors and bound by an effective oath of silence.

Given that opaque nature, the machinations of its succession processes remain largely hidden from view. Appointments require approval by the board, which is made up of governors of the 63 central banks that own it.

With prior jobs that encompassed both setting interest rates and in chairing the Basel Committee on Banking Supervision, De Cos would bring wide and relevant experience to the position. 

He is currently chair of the advisory technical committee of the European Systemic Risk Board, a panel created by the European Union in the wake of the 2008 global financial crisis.

De Cos led the Bank of Spain for a non-renewable six-year term that lasted until June. After a hiatus caused by political strife, former government minister Jose Luis Escriva got that job in September. 

Both he and De Cos are former employees of the European Central Bank, and both can plausibly claim to have built some of the most successful careers of any staff members from the Frankfurt-based institution. 

ECB President President Christine Lagarde was outspoken in her praise for him in June, calling him “fantastic team player and a class act.”

–With assistance from Mark Schroers and Bastian Benrath-Wright.

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