Once the congressional process is completed, José Luis Escriva will take office this Friday. as Governor of the Bank of SpainProcedures have been accelerated so that the former Minister of Social Security and more recently of Digital Transformation and Civil Service can make his debut next week as a member of the board of directors of the European Central Bank (ECB), where a new rate cut will likely be announced. decided.
Escriva does not arrive in an unknown place. He started his career as a technician at the Bank of Spain and became deputy director of the monetary and financial studies department and head of the monetary research unit of the institution. He leaves behind many colleagues and some friends. The determined commitment that President Pedro Sánchez maintained for him to become governor was decisive. In fact, his name was the only one that the government proposed in the negotiations with the Popular Party, which ended without an agreement. With this amendment, the former minister has been learning about the dynamics of the organization for some time. He maintains personal contacts within the public institution who have explained to him certain aspects of its internal functioning.
Escrivá concluded that some changes should be made to the Bank of Spain, according to sources close to the former minister. He is in favor of a deep internal restructuring of the supervisor. Pablo Hernández de Cos, whom he continues to consider an outstanding disciple who, as he recognizes, sotto voce— marked a before and after in the management of communication and the international projection of the bank, leaving an important legacy abroad. But Escriva is convinced that this work must be completed by the transformation of the old structures of the organization. The new governor is a defender of evaluation policies and although he has always admired, since his time at the Independent Authority for Fiscal Responsibility (Airef)), the capacity and power of the Bank of Spain's study and prospecting center, believes that they need to be modernized.
The timing could not be more opportune, since the change at the top coincides with the culmination of the first Strategic Plan that the institution launched in 2020, an expiration that requires not only a global assessment of its compliance levels, but also to develop a new roadmap for the coming years. For the moment, the specific reviews of the programs implemented have focused on issues such as macroeconomic projections, research activities, internal audit or even the communication of their actions. There is a lack of an overview and probably a decisive approach regarding the configuration of the decision-making bodies of control.
For example, government sources have spoken in recent months of the need to rebalance powers within the Executive Commission, one of the organization's main decision-making bodies. This is a key example. According to the Bank of Spain itself on its website, it not only has the function of formulating “recommendations and requirements” to entities, but also decides on administrative authorizations or agrees on “intervention measures and replacement of administrators.” In other words, everything important passes through this conclave, made up of the governor, the vice-governor and two future advisors. In this last condition, the Executive is concerned about the presence and growing weight in the debates of Fernando Fernandeza professional of recognized prestige and former chief economist of the International Monetary Fund (IMF), but elected at the request of the PP and with a clearly liberal profile, who has also been very critical of the election process of the new leadership of the PP. institution. It remains to be seen how the new balances of power are now configured and whether there is a desire to redefine the governance of the Bank.
The Escriva era will also mark the way in which the supervisor's policy will be defined when it comes to positioning itself on key issues of macroeconomic policy, from pension reform to increasing the minimum wage or minimum living income, including the possibility of publishing certain macroeconomic projections. De Cos and the vice-governor, Margarita Delgado, have brought a stamp of independence that Escrivá, originally, did not have. In addition, his research department, the best in the country, will have to give its opinion on issues on which Escriva himself legislated. It would not be surprising if the new governor chooses to limit exposure to emissions outside the financial system, in line with the postulates of other international central banks.
“The independence of the Bank of Spain is not compromised in any way and I want to make that very clear,” said yesterday the Minister of Economy, Carlos Body, in repeated interviews in various audiovisual media. The minister of Extremadura explained that the bank will have to analyze the policies, actions or measures of the Government in economic matters, like other bodies such as the Tax Administration. Body is convinced that these evaluations are transparent, rigorous and that the data and assumptions used are available in a way that can be verified, as is currently the case. “This is what is important and what will guarantee the effective maintenance of the autonomy and independence of the bank.” Some government sources fear that the reports that the Bank of Spain will publish in the coming months will be more severe with regard to the government's policy aimed at Escrivá trying to obtain the seal of independence.
Another of the changes expected in the institution concerns the rebalancing of its functions. During the mandate of Pablo Hernández de Cos, the bank focused on prospecting reports and the evaluation of economic policies. “An effort was made to try to shine the spotlight and see beyond the short term,” justifies a source from the supervisor. But over time, the role of the Bank of Spain as financial supervisor has faded. Its discretion attracted attention when negotiating the financial sector agreement to protect vulnerable mortgage holders or in its monitoring of competition in deposit remuneration after the ECB rate hikes. Escriva should now reorient the functions of the institution to balance it.