German central bank chief Jens Weidmann to resign, citing personal reasons
Weidmann asked German President Frank-Walter Steinmeier to dismiss him from office at the end of the year.
FRANKFURT – Bundesbank President Jens Weidmann said Wednesday he will leave the German central bank at the end of this year due to personal reasons — but used the chance to re-assert his warning of inflation risks.
Weidmann asked German President Frank-Walter Steinmeier on Wednesday to dismiss him from office on 31 December, the Bundesbank said in a statement.
“I have come to the conclusion that more than 10 years is a good measure of time to turn over a new leaf — for the Bundesbank, but also for me personally,” Weidmann wrote in a letter to the Bank’s staff. He did not elaborate further.
Weidmann, a well known inflation hawk, became president in May 2011 after his predecessor Axel Weber resigned in protest of ECB crisis measures.
At the time, Weidmann privately criticized Weber for resigning rather than fighting on for the policies he believed in. But he may have developed more understanding for Weber’s call in recent years, as he fought his own struggle as an ever-lonelier hawk on the Council.
In his statement, however, Weidmann hewed a diplomatic line, saying only he continues to firmly believe the ECB should stick with its original narrow mandate of controlling inflation.
“A stability-oriented monetary policy will only be possible in the long run if the regulatory framework of the Monetary Union continues to ensure the unity of action and liability, [and] monetary policy respects its narrow mandate and does not get caught in the wake of fiscal policy or the financial markets,” he wrote.
That comment may be a nod to ongoing discussions on the Governing Council to transfer some of the flexibility of the pandemic-induced asset purchase program, known as PEPP, to previously existing programs. This move would allow the ECB to focus its government bond purchases on individual member states, thereby removing spreads in borrowing costs and, arguably, reducing the incentive for sound fiscal policies.
Weidmann also said policymakers must remain alert to prospective inflationary dangers and not just look at deflationary risks. But he thanked his colleagues on the Governing Council “for the open and constructive atmosphere in the sometimes difficult discussions of the past years.”
ECB President Christine Lagarde, meanwhile, said she “immensely” regrets Weidmann’s decision.
“While Jens had clear views on monetary policy I was always impressed by his search for common ground in the Governing Council, by his empathy for his Eurosystem colleagues, and his willingness to find a compromise,” she said in a statement.
Weidmann’s resignation will open another key position to be handed out in German government coalition talks.
The chief of the Free Democrats, Christian Lindner, tweeted that he regrets Weidmann’s decision.
“He stood for a stability-oriented money policy, the importance of which is on the rise given inflationary risks,” said Lindner, who has an eye on the finance ministry.
Names of potential successors previously floated include ECB Vice President Claudia Buch, German state secretary Jörg Kukies, and economists Marcel Fratzscher and Volker Wieland. Another option would be for ECB Executive Board member Isabel Schnabel to move over to the Bundesbank and leave her current job for one of those candidates.
This story has been updated.
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