MNI: Politics Looms Over Choice Of Next Bundesbank Chief

There is no official shortlist of candidates to replace Jens Weidmann as head of the Bundesbank, Berlin sources told MNI, but finance industry and eurosystem officials said those in the running could include his vice-president Claudia Buch and European Central Bank Executive Board member Isabel Schnabel.

Other possibilities are Marcel Fratzscher, the highly visible president of the German Institute for Economic Research (DIW Berlin), and former Goldman Sachs banker Joerg Kukies, currently state secretary for financial market and European policy at the Federal Ministry of Finance.

But most candidates mentioned had potential drawbacks, and some sources expressed concern that the process of replacing Weidmann, who said on Wednesday that he would leave at the end of the year for personal reasons after 10 years in charge of Germany's central bank, would become politicised amid talks to form a new governing coalition.

The departure of the hawkish Weidmann could have major implications for the European Central Bank and the eurozone, said Markus Ferber, spokesman for the centre-right EPP group in the European Parliament. The incoming German government, set to include the centre-left Social Democrats in coalition with the Greens and the liberal Free Democrats, is likely to choose someone favourable to expansive monetary policies, he said.

"Weidmann's resignation means that a strong counterbalance to [ECB President Christine] Lagarde's ultra-accommodative monetary policy will be gone. That is bad news for the stability of the single currency," Ferber said.

Buch was mentioned by a number of sources, though there were doubts over whether she wants the job. "Buch ticks a lot of boxes on paper, and she's definitely well qualified," said one. "But would she want it? She's not one to grab the limelight." Another source, close to governing coalition talks, noted that she had not emerged unscathed from the Wirecard scandal.

SCHNABEL, FRATZSCHER

Executive Board member Schnabel would be a strong candidate, a number of sources said. However they were unsure whether she would want to leave her current powerful job.

Fratzscher, also professor of macroeconomics at Humboldt-Universität zu Berlin, was mentioned by some as a figure with leadership experience whom the centre-left SPD would strongly favour. However, others felt he might not be suited to the "very, very conservative" culture of the Bundesbank. Kukies was described as "hawkish enough", but may also have been damaged by the Wirecard affair.

Other figures cited include University of Wurzburg professor and former German Council of Economic Experts (GCEE) member Peter Bofinger, current GCEE member and University of Frankfurt professor Volker Wieland, and Joerg Asmussen, a former ECB and German government official who leads the German Insurance Association (GDV).

A former adviser to outgoing Chancellor Angela Merkel's government told MNI the Social Democrats will want to make a political appointment.

"It depends on the Greens and the Free Democrats to depoliticise, but I am not optimistic. And there is always the need to take care of political friends," the former adviser said.

The source close to the coalition talks noted that Weidmann, closely linked to Merkel, was himself a political figure.
"The idea could be that with a non-aligned president, the vice president post could be more easily appointed with an agenda," the source said. "Names have not been tossed around too much yet."