ECB Prize for Germany Might Require Plan B If Weidmann Falters
(Bloomberg) -- If Germany wants one of its nationals to clinch the leadership of the European Central Bank above all else, it might need a backup plan.
While Bundesbank chief Jens Weidmann is the country’s assumed candidate vying to succeed President Mario Draghi, his frequent opposition to the Italian’s policies risk making him unpalatable for other countries.
So if Chancellor Angela Merkel decides Europe’s biggest economy deserves the job, she may require an alternative name just in case. Her list could include seasoned official Klaus Regling, Weidmann’s deputy Claudia Buch, or another German waiting in the wings.
“It’s odd in a way that the biggest nation in the euro zone hasn’t had the presidency of the ECB thus far,” said Stewart Robertson, an economist at Aviva Investors. “In one sense, it would be odd if it wasn’t a German.”
Nationality shouldn’t matter, according to Benoit Coeure, a French candidate for the top job who is already a member of the ECB’s Executive Board. But he and his rivals know that the prize of managing the central bank, along with positions on offer at the European Commission and the Council, will be subject to horsetrading that prioritizes passports.
Weidmann, now a veteran on the ECB Governing Council and Merkel’s former economic adviser, is Germany’s most obvious contender. But he might struggle to pass the test set by French Finance Minister Bruno Le Maire, who said the ECB needs someone with similar “courage” to Draghi. The ECB chief stemmed the region’s sovereign debt crisis with his Outright Monetary Transactions tool, opposed by the Bundesbank.
While it’s not yet clear if the chancellor will pursue the ECB job, here are some alternatives if she does.
Chief of the European Stability Mechanism, a backstop for countries created during the region’s sovereign-debt turmoil, Klaus Regling spent much of the 1990s at Germany’s Finance Ministry. His role helping prepare for economic and monetary union arguably makes him one of the architects of the euro.
Regling was mentioned as a possible successor to ECB President Jean-Claude Trichet before Draghi got the job. His ability to skirt controversy and his role interacting with markets might appeal to the French. He lacks experience in central banking however, and turning 69 just before Draghi leaves, he would be the oldest-ever ECB president taking office.
In the Room
As Bundesbank vice president, Claudia Buch frequently accompanies Weidmann at the ECB’s Governing Council. Prior to joining the institution in 2014, she was a member of the German government’s panel of economic advisers. She has been critical of ECB bond purchases, but her credentials and gender could be attractive for European Union governments if they decide to care about a lack of women in top roles.
Marcel Fratzscher, head of the influential DIW Institute for Economic Research in Berlin, might be a bigger hit outside Germany than at home. He previously worked for more than a decade at the ECB. Last year he co-authored a Franco-German academic policy paper on reforming the euro zone. He has frequently defended ECB policies in Germany, and may be seen as too left-leaning for Merkel’s CDU party to stomach.
Quite a Comeback
The chairman of Swiss bank UBS Group AG, Axel Weber was the leading contender to replace Trichet until he resigned as Bundesbank president in 2011 just as Merkel was pushing his candidacy. That debacle, and the proximity of his views to Weidmann, makes another attempt improbable.
Joerg Asmussen, a former ECB Executive Board member who is now a banker at Lazard, helped communicate policy to a skeptical German public during the region’s debt crisis while playing a key role liaising with finance ministers. A member of the Social Democratic Party, he did garner some respect from Merkel’s center right colleagues. Asmussen quit the ECB after only two years, and then left politics after a stint as deputy labor minister.
A Couple More
- Martin Blessing: grandson of a postwar Bundesbank president, he steered Commerzbank AG through the financial crisis of 2009
- Clemens Fuest: economist who leads the Ifo Institute in Munich
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