Merkel's man picked for Bundesbank

16th February 2011, Comments 0 comments

Chancellor Angela Merkel on Wednesday chose a close aide to head Germany's powerful central bank, a move analysts took to mean she has given up on having a German lead the European Central Bank.

The appointment of Jens Weidmann, 42, as the youngest ever Bundesbank chief followed last week's surprise resignation of Axel Weber and also sparked concerns the Bundesbank's jealously guarded independence might be undermined.

"Anyone who knows Jens Weidmann knows that has excellent professional skills, a brilliant intellect and that he has an independent mind," Merkel told reporters, in an apparent bid to pre-empt such concerns.

Weidmann will take up his new position on May 1, Merkel said, also appointing Sabine Lautenschlaeger-Peiter as vice-president of the institution.

Foreign Minister and vice-chancellor Guido Westerwelle said Germany had not "given up on its ambitions for the ECB. We want to contribute to a German culture of stability in Europe."

But ING senior economist Carsten Brzeski told AFP that Weidmann's appointment suggested it was unlikely that Berlin could now get a German to head the ECB.

Weber was a front-runner for that job and there was much speculation that Berlin had held off from pushing for other top European positions in the hope of getting their man into the Eurotower in Frankfurt, the ECB's headquarters.

But compatriot Juergen Stark remains on the ECB's six-person Executive Board and an unwritten rule says two people from the same country cannot sit on this body, Brzeski noted.

It had been widely speculated that Berlin's plan had been for Weber to move to the ECB and for Stark to take his job at the Bundesbank. But Weber's departure and Weidmann's appointment mean this is now off the cards.

The Die Welt daily cited sources saying Stark wanted to stay at the ECB. "Thus, it is practically ruled out that Germany has a chance to get its own candidate for the presidency."

"I think this means that we will no longer have a German ECB president because it has blocked the road for Stark to join the Bundesbank ... I think the German government now has to swallow it," Brzeski said.

He said Italy's central bank governor Mario Draghi was now the favourite for the ECB job. "No one doubts his competence," he said.

Considered a young economic prodigy, Weidmann has enjoyed a stellar career, spending the past five years as Merkel's close economic aide.

He has piloted her through a series of crises, including the international financial meltdown, resulting banking problems in Germany, a months-long saga over the future of carmaker Opel and the recent euro crisis.

A straight-laced and baby-faced bespectacled economist, he became a trusted aide of Merkel or, as Die Welt put it, "the man who whispers in the chancellor's ear."

He will now head the Bundesbank and, perhaps more importantly, sit on the Governing Council of the ECB, the 23-person body that decides interest rates for the eurozone.

Some questioned the appointment of someone so close to the centre of power as head of the Bundesbank, an institution that has always jealously guarded its independence from political interference.

Barclays Capital economist Thorsten Polleit told AFP: "Eyebrows might be raised" at the path leading straight from Merkel's office to Frankfurt.

However, the influential Sueddeutsche Zeitung said in an editorial that such concerns were unjustified.

"Anyone who knows Weidmann realises that while you may justifiably be concerned about his heart given his 70-hour weeks, you needn't worry about his integrity.

"Weidmann has always been loyal to Merkel and from May onwards he will dedicate the same loyalty to the Bundesbank," the newspaper wrote.

© 2011 AFP

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