Weidmann marks tide of change for Bundesbank
French-speaking prowess may build bridges with Paris
by David Marsh
Mon 21 Feb 2011
The appointment of Jens Weidmann as president of the German Bundesbank from 1 May as the successor to Axel Weber marks a significant change in the politics and psychology of central banking in Europe. But not principally for the reasons the critics say.
Commentators make much of Weidmann’s closeness to Angela Merkel, the German Chancellor, and claim this could diminish the Bundesbank’s vaunted independence. However, more importantly, he is the youngest-ever Bundesbank president. And he is the first one to speak French.
Weidmann has been Chancellor Merkel right-hand-man as chief economic adviser and ‘sherpa’ at international summits. He has been centrally involved in Germany’s efforts to overcome the financial crisis, the ensuing recession and now sovereign debt turbulence within monetary union.
Criticism that his promotion weakens the Bundesbank’s statutory freedom from political influence misses the point. The Bundesbank is no longer the institution it once was. Creation of Europe’s monetary union in 1999 was a deeply political act with deeply economic consequences. Inevitably, the German central bank has been part of a much more politicised regime of monetary management for the past 12 years. The Bundesbank is subsumed within a 17-strong European system of central banks. The interplay with governments – whatever the statutes say about the supreme independence of the European Central Bank - is a fact of life.
The attempts by Merkel and Nicolas Sarkozy, the French president, to install some form of ‘economic government’ in Europe to accompany the purely monetary aspects of economic integration confirm how the world has changed. The mistakes and miscalculations of the last 12 years show how monetary union has to be part of a more united political system in Europe. Merkel now seems to understand that vital point. Weidmann will do his best (against considerable odds) to help her implement it. That is not loss of independence. That is political and economic reality.
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