Alexandre Lamfalussy, central banker, 1929-2015

Alexandre Lamfalussy, one of the most important architects in laying the foundations for Europe's monetary union, has died aged 86.

When he became the first president of the European Monetary Institute, the forerunner of the European Central Bank, he was already aware of the challenges his successors would face.

Lamfalussy had made the trip to Frankfurt in 1994 from Basel, where he had spent 10 months squatting in one of the buildings at the Bank for International Settlements, the so-called central bankers' bank and one of his former employers. During his time there he worked on the building blocks for the new organisation supported by a few staff as political leaders squabbled over the site of the institute's headquarters.

When the EMI moved into the Eurotower, one of Frankfurt's skyscrapers, the staff of 150 was given the job of introducing European monetary union as laid out in the Maastricht treaty.

He knew the treaty well. As the BIS's general manager, Lamfalussy had already served as a member of the Delors Committee of central bankers that plotted the course towards monetary union. German chancellor Helmut Kohl's political ambition, with Lamfalussy's technical knowledge, had made for a good combination during periods when the monetary union project was unpopular in Bonn and elsewhere. Yet, while Lamfalussy was a skilled technocrat, he was also shrewd enough to realise the eurozone's central banker-in-chief would also require a knowledge of realpolitik.

"Even if you define the job in a narrow technical way, it has very deep political connotations," he told the Financial Times soon after taking the job. "I am trying to use the present relatively calm waters to make the institution function. If and when a crisis breaks, we will see how I shall be able to handle it."

Lamfalussy, who left in 1997, never had to. But with today's ECB a target of anti-austerity protests over its role in the troika and attacks from Germany's economic establishment for risking the debasement of the euro, those words have proven remarkably prescient for the present incumbent.

After he was replaced at the helm of the EMI by Wim Duisenberg, who later became the first head of the ECB, Lamfalussy helped build the EU's single market in financial services, setting out new processes for regulation.

Baron Alexandre Lamfalussy was born in Kapuvar, Hungary, on April 26 1929. He fled to Belgium at the age of 20 to escape communism. He perfected his English, still the working language of the ECB, during his time as a research student at Nuffield College, Oxford, in the 1950s. "He had a good way of bringing economic issues to the fore in elegant language and being vaguely impolite in a cut-glass Edwardian accent," said David Marsh, managing director of OMFIF, a forum for central banks and financial companies, and a historian of the euro project.

After working as a bank economist and academic, Lamfalussy became chair of the Banque de Bruxelles in the mid 1970s before joining the BIS in 1976, first as head of its prestigious monetary and economic department. He became the general manager in 1985, until leaving to join the EMI at the end of 1993.

Jaime Caruana, the current BIS general manager, said: "Like many who lived through the second world war, Mr Lamfalussy was a strong supporter of European economic and political integration. Throughout his career, he combined a brilliant intellect with a soft-spoken and courteous manner."

Under Lamfalussy, the EMI's staff sowed the seeds of the ECB as it stands today. The nuts and bolts of the eurosystem's day-to-day work, the pan-European payments and settlements system, were set up under his command. The pioneers also had to decide on the ECB's policy strategy and toolkit under the eye of the Bundesbank, Germany's central bank, adamant that monetary union would be set up in its image.

The ECB said on Monday it was "mourning a very dear former colleague and friend".

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