It is a departure in full uncertainty for the future of European monetary policy. The influential president of the German Bundesbank, Jens Weidmann, a figure of monetary orthodoxy, announced Wednesday, October 20 that he would step down at the end of the year, after ten years at the head of the institution.
“I have come to the conclusion that after more than ten years, it is the right moment to open a new chapter – for the Bundesbank, but also for me personally ”, wrote the president of the “Buba” in a letter to the employees of the institution.
During his tenure at the Bundesbank, which was not due to end until 2027, Mr. Weidmann was unable to prevent Germany’s loss of influence over euro-zone-wide monetary policy by the European Central Bank (ECB).
The announcement of his departure also comes as Germany prepares to turn the page Angela Merkel, to whom was linked the career of this central banker, who embodied the country’s obsession with the fight against inflation. .
Tighten the credit screw
The reluctance long expressed by Mr. Weidmann in the face of the expansionist course taken by the ECB under former president Mario Draghi is still felt in his letter of departure. In the future it will be “Crucial (…) not only to consider the risks of deflation, but also not to lose sight of the potential inflation risks ”, which suggest a more restrictive monetary policy, he wrote in his letter.
Mr Weidmann has already been pleading for several months for the ECB to consider tightening the credit screw after deploying an arsenal of exceptional support measures in the face of the coronavirus crisis.
He is also worried about a lasting surge in inflation in the euro zone that Christine Lagarde’s institution considers temporary for the moment. He pleads in his mail so that “Monetary policy respects its narrow mandate and does not get carried away by fiscal policy or the markets”.
ECB President Christine Lagarde, “Respect” corn “Also greatly regret” the departure of Mr. Weidmann, she said in a statement from the institution. The Frenchwoman notably praises the “Willingness to find a compromise” at the German banker, which recently came out when the ECB debated and then adopted a new strategy.
German President Frank-Walter Steinmeier has yet to endorse Mr Weidmann’s request to be removed from his post. His or her replacement will be appointed after agreement within the German government.
However, the surprise announcement comes in the midst of discussions between the three parties which won the last parliamentary elections in Germany, the Social Democratic Party (SPD), the Greens and the Liberal Democratic Party (FDP), with a view to forming a new government that could be more flexible on monetary and fiscal policy issues.