Germany to Extend Weidmann's Contract as Bundesbank President

(Bloomberg) -- The German government will propose extending Bundesbank President Jens Weidmann’s contract for a second term as the close ally of Chancellor Angela Merkel waits to see if he is picked later this year for the top job at the European Central Bank.

Weidmann, who sits on the ECB’s Governing Council and is a contender to succeed President Mario Draghi in November, should serve another eight-year term after his current deal expires in April, a government spokesman said in an emailed statement.

“The Bundesbank president has filled the role in a convincing and impressive manner, so it would be good if he continues in office,” said the spokesman, who requested anonymity in line with briefing rules. The Bundesbank also confirmed the proposed contract extension, which needs formal approval from President Frank-Walter Steinmeier.

“Jens Weidmann is passionate about his role as a monetary policy maker and Bundesbank president and is looking forward to a second term,” the Frankfurt-based central bank said.

Weidmann, considered a monetary hawk, was once seen as the frontrunner to succeed Draghi as the euro region’s highest central bank official and become the first German in the job. However, he suffered a setback when compatriot Manfred Weber was put forward by the European People’s Party as their candidate for European Commission president.

Horse Trading

European Union governments are unlikely to allow Germany to fill two such senior posts but Weidmann’s chances could improve if Weber’s bid fails after EU Parliament elections in May. The appointment will be part of complex government horse-trading, focusing on nationality and gender as well as expertise.

EU governments this year will also need to agree on successors for the heads of the European Council and European Parliament, among other key posts. While Germany has signaled its interest in a top job, Berenberg Chief Economist Holger Schmieding reckons political expediency might make French President Emmanuel Macron the kingmaker.

“Macron can probably decide whether he wants to claim the presidency of the ECB or the EU Commission for a candidate of his choosing,” Schmieding said.

Weidmann became the German central bank’s youngest president in 2011 after his predecessor, Axel Weber, resigned to protest ECB bond purchases. Now 50, he has taken a hard line against loose monetary conditions, earning him respect at home but criticism from Draghi for his perceived intransigence. That may count against him if other nations fear that he’ll be too hasty in tightening policy.

After studying in Germany and France, Weidmann worked at the International Monetary Fund, and took a break from the Bundesbank from 2006 to 2011 to work as an adviser to Merkel.

--With assistance from Chris Reiter.

To contact the reporters on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net;Jana Randow in Frankfurt at jrandow@bloomberg.net;Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Iain Rogers, Craig Stirling

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