Claudia Buch's qualifications are undisputed, but her nomination for the head of ECB banking supervision was contentious. Now, only the approval of the Eurozone finance ministers stands between Bundesbank Vice President Claudia Buch and her new position at the European Central Bank (ECB). This is considered a mere formality.

On German Unity Day, the 57-year-old survived a crucial vote in the European Parliament. Unlike the Eurozone finance ministers' approval, this was not a mere formality. Some MEPs felt overlooked in the succession of Andrea Enria, who is set to step down from his position at the end of the year. In the spring, they had supported Buch's competitor, Margarita Delgado from Spain, as the new head of ECB banking supervision. Nevertheless, the ECB Council nominated the German candidate. ECB President Christine Lagarde publicly defended the decision afterward.

The German Green Party remained firm in their opposition; their members in the European Parliament announced they would vote against Buch's appointment as chief banking supervisor. Nonetheless, Buch received a comfortable majority of 357 out of 594 votes in a secret ballot, despite the Greens' ongoing disagreement with the ECB.

Following the successful vote, Buch received accolades for her qualifications. The Single Supervisory Mechanism (SSM) will have "a chairwoman who brings the necessary experience and composure to navigate the European banking sector through challenging waters," said Markus Ferber, the CSU financial expert. Considering the bleak economic outlook and its implications for bank balance sheets, he noted that the next few years wouldn't be smooth sailing: "Claudia Buch possesses the necessary qualities to meet these challenges."

Buch is expected to assume her new role in January 2024, pending approval from the Eurozone finance ministers. Bundesbank President Joachim Nagel views his colleague's upcoming departure with mixed feelings. On the one hand, he is pleased for Buch, whom he has known for a long time, and sees her appointment as an honor for the Bundesbank. On the other hand, he now has to find a new deputy and select someone new for the essential task of banking supervision. Moreover, and perhaps more crucially, staff shortages in the board are becoming more pronounced.

Buch's departure isn't the only challenge. In March, Joachim Wuermeling announced that he would take on a new role in 2024, leading him to leave the Bundesbank at the end of the year. Additionally, Johannes Beermann had already left the board by the end of 2022, and a successor has yet to be found. As a result, the board could be reduced from six to three members at the turn of the year.

Originally, Hesse had the right to propose Beermann's successor. However, due to an upcoming state election in the state, Hesse and North Rhine-Westphalia agreed to swap the right: NRW will now handle Beermann's replacement, and Hesse will have the opportunity when Wuermeling departs. The right to propose the successor for Vice President Buch belongs to the German government.

Bundesbank President Nagel emphasizes the crucial role of the Bundesbank in ensuring price and financial stability, urging swift decisions. At the same time, there are concerns within the Bundesbank that positions are filled based on political considerations rather than qualifications for the job, as has often been the case in the past. Germany has an abundance of talented economists to offer. Many view KfW Chief Economist Fritzi Köhler-Geib as a suitable candidate.

Discussions about downsizing the Bundesbank board have also reemerged. While the board was reduced from eight to six members in 2007, Nagel maintains that the current size, with six members, is appropriate.