The German Central Bank (Bundesbank) needs a new head. Incumbent President Jens Weidmann announced his resignation later this year. Finding a successor is the task of the next federal government.
The president of the German Central Bank, Bundesbank, Jens Weidmann, announced his sudden resignation at the end of this year. The 53-year-old wrote in a letter to his employees that more than ten years in office is a good time to turn over a new leaflet – “for the Central Bank, but also for me personally”. After all, those ten years included overcoming the debt crisis and, in the last year and a half, the coronary crisis – years in which monetary policy had to constantly face new challenges.
Jens Weidmann has headed the Deutsche Bundesbank since May 2011. He succeeded Axel Weber, who resigned in the European Central Bank (ECB) monetary policy dispute. Weidmann has also always taken a stability-oriented position on the Governing Council of the ECB, of which he is a member as President of the Bundesbank, says Jörg Krämer, chief economist at Commerzbank: “He has always been against a policy of “He has defended the independence of the Central Bank, and he has done all this with very, very intelligent arguments.”
Most of the time in the minority
Yet among the many pigeons that tend to be in favor of a free monetary policy on the Governing Council of the ECB, he has remained in the minority, especially in recent years. This may be one reason for his premature withdrawal, Krämer suspects: “When you fail to impose yourself over ten years with very, very good arguments, then that certainly plays a role.”
Jens Weidmann’s resignation comes at a time when monetary and fiscal policy is facing significant challenges, says Stefan Kooths, director of research at conjuncture and growth at the Institute for World Economics (IfW) in Kiel: “In particular, “It is clear that the euro area needs to find a way out of zero interest rate policy, and this will not be a walk in the park in the face of high debt levels even in the large member states.” In this context, a consistent orientation towards stability, which Weidmann represents, is very important.
The offspring should be a high profile personality
“It is important to find a similar high-profile, experienced personality to succeed Jens Weidmann,” said Michael Holstein, chief economist at DZ-Bank. “If the Bundesbank does not act as a warning against the risks of money financing by the ECB and for a tightly defined mandate, it will not be left unaffected by inflation expectations,” warns economist IfW Kooths. “Such a development would be problematic anyway, in the current situation it would come at a completely inappropriate moment.”
Who succeeds the president is in the hands of the next federal government. In addition to the president, she will appoint the vice-president as well as “another member”, as defined by the law of the German Central Bank, Bundesbank. The other three board members will be appointed by the governments of the federal states.
As a successor, a woman can now be elected to this post for the first time. Vice President Claudia Buch is mentioned, but also the director at the ECB, Isabel Schnabel. Because the position will probably be determined by the next federal government, party political proximity may also play a role. The name of Marcel Fratzscher is also mentioned. The head of the German Institute for Economic Research (DIW) is close to the SPD. On the current Bundesbank board, five of the six positions have been appointed by the CDU / CSU to the federal and state governments.
All are still speculations. At that time, even Jens Weidmann was not mentioned from the beginning.
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