Today German Chancellor Angela Merkel named Jens Weidmann as the new Bundesbank President to replace Axel Weber following his formal indication late last week that he will leave his post at the end of his term on April 30th, and will not run to succeed ECB president Jean-Claude Trichet, whose term ends in October.
Weber’s decision to step down (and he was widely viewed as the top candidate to succeed Trichet), as well as the appointment of Weidmann, are significant as it relates to the shape of Germany’s and Europe’s monetary and fiscal policy. So who is Weidmann?
-Born on April 20, 1968
-Age 42 = the youngest head of the German central bank in its 54-year history and also the youngest member of the European Central Bank’s governing council
-Married with two children
-Ph.D. in economics at Bonn University
- 2006 – Present: currently Merkel’s senior economic advisor and head of the economic and financial directorate of the Federal Chancellery
- He is also German’s “Sherpa” for meeting of the G8 leading nations and G20 industrialized and developing countries
- 2003-2006: head of Bundesbank’s Monetary Policy and Analysis Group
- 1: Weidman served as secretary-general of the German Council of Economic Advisors (the 5 German wise men)
- 1997-99: worked for the IMF in Washington
- ~1987: studied economics in Aix-en-Provence, Paris, and Bonn and did internships at the Bank of France, the German economic ministry and in the central bank of Rwanda
- Weidmann worked feverishly behind the scenes to hammer out rescue plans for German banks embroiled in the global financial crisis and for carmaker Opel
- Last year, he quietly supported Economy Minister Rainer Bruederle’s right to reject aid for Opel, the European arm of U.S. carmaker General Motors, even though Merkel was in favor of providing assistance to safeguard German jobs
- He urged Merkel to resist quick aid for Greece and to involve the IMF in any European aid program, winning both arguments over the opposition of Finance Minister Wolfgang Schaeuble
What’s clear is that Weber leaves a large leadership hole with his departure, not only due to his experience, but in our opinion, due to his hawkish and conservative policy values, including dissention with Jean-Claude Trichet. Weber displayed firm opposition to the ECB’s bond repurchasing program; was proactive in addressing inflation threats to maintain price stability; and voiced opposition to blanket bailout facilities for Eurozone members.
In short, we question if Weidmann will remain true to the former Bundesbank ideals of hawkish monetary and fiscal policy. His Ph.D. professor Manfred Neumann said, “ He’s a contrast to Weber, not in terms of substance but in his manner.” Clearly the Francophone Weidmann has been shaped by Weber, who he studied under and was hand-selected by in 2003 to join the CB, and comes to his new role with great achievement, most currently as Chancellor Merkel’s main economist to direct Germany’s policy through the financial, economic and Eurozone debt crisis.
We’ll let actions speak for themselves, however we hope that Weidmann can uphold where Weber left off in influencing hawkish fiscal and monetary policy on the ECB council, and moreover helps shape the threat of rising inflation throughout the region and policy to deal with the ongoing debt and deficit imbalances of some Eurozone member states.
This week we’ll publish on the leading candidates for the ECB presidency.