Klaas Knot, a candidate to succeed Christine Lagarde as ECB president, said ECB
tools to stabilise sovereign bond markets cannot substitute for responsible
public finances and that intervention is sometimes unavoidable. He said the ECB
can provide a firewall in cases of market disorder but cannot replace sound
fiscal policy. Knot, former governor of the Dutch central bank, is competing
with Spanish candidate Pablo Hernández de Cos; the leadership contest may hinge
on which candidate is judged better able to contain financial market stress and
withstand sovereign bond sell-offs. Lagarde last month said she will leave on
Feb. 7, 2027, nearly nine months before the scheduled end of her eight-year
term, and recent worries over French debt have revived memories of the euro-area
sovereign debt crisis.
