Merkel adviser to head Bundesbank

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Merkel adviser to head Bundesbank

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The new head of Germany’s central bank is Jens Weidmann, who was Chancellor Angela Merkel’s top economic adviser for the last five years.

The 42-year-old replaces Axel Weber, who is quitting the Bundesbank post early and has pulled out of the race for the job of president of the European Central Bank which comes free in October when Jean-Claude Trichet steps down.

Merkel’s choice means continuity in terms of the German’s central bank’s focus on fighting inflation and makes it less likely she will insist on a German running the ECB.

But does the appointment raise political questions? Analyst Robert Halver of Baader Bank said: “One could argue and indeed say: what about the Bundesbank’s independence if a close aide is given this job? But I believe that the current difficult times we are facing – such as the euro crisis and the stability crisis and how the ECB and the Bundesbank deal with them – demands unconventional solutions.”

Merkel herself played down concerns expressed by some opposition parties that she was making an overtly political appointment.

“Everyone acquainted with Jens Weidmann knows he is highly competent on the issues, has a brilliant intellect and an independent mind,” she said.

“We are all convinced that he will be an outstanding president of the Bundesbank and will represent Germany and use his voice in the European Central Bank to promote a stability culture,” Merkel said. “He will defend Germany’s own interests.” As Bundesbank chief, Weidmann will sit on the ECB’s governing council.

At the Bundesbank, Weidmann is expected to bring a softer profile, more low key style and greater political experience, in contrast to the sometimes brusque Weber, who alienated other European countries with his criticism of the ECB’s buying of weaker euro zone members’ government bonds.