Germany backs new Bundesbank term for Weidmann as ECB rumours swirl

Germany backs new Bundesbank term for Weidmann as ECB rumours swirl
German Bundesbank President Jens Weidmann presents the annual 2018 report in Frankfurt, Germany, February 27, 2019. REUTERS/Kai Pfaffenbach   -  Copyright  KAI PFAFFENBACH(Reuters)
By Reuters

BERLIN (Reuters) – The German cabinet gave the green light on Wednesday for Bundesbank President Jens Weidmann to serve a second eight-year term, a move that keeps him in the mix as a possible successor to ECB chief Mario Draghi later this year.

The ECB’s top job will become available from November and while Bank of France Governor Francois Villeroy de Galhau is seen as the frontrunner, the selection process has yet to start and several names remain in the frame.

A monetary policy hawk, Weidmann has often challenged the ECB’s ultra-easy monetary policy, criticising decision sometimes within hours of policy meetings, irking fellow policymakers in the process.

His first Bundesbank term expires at the end of April. Before he took over the post in 2011, Weidmann advised Chancellor Angela Merkel on economic policy.

The prospect of Weidmann, 50, succeeding Draghi is controversial among the 19 members of the euro zone, with some southern European countries traditionally opposed to the idea of having a German in the job. Others, including Austria, however, openly back him.

Still, despite earlier conflicts, Italy’s economy minister kept the door open last month to Weidmann’s candidacy, saying that past disagreements should not weigh on the decision.

Draghi’s successor is likely to be named only after elections for the European Parliament in May. The decision feeds into a package of posts that includes heads of the European Commission and Council.

It is commonly accepted that Germany could only win one of these positions and Merkel is expected to seek the Commission Presidency for Germany.

However, Die Zeit weekly reported that Berlin believed the chances of Weidmann succeeding Draghi at the ECB were growing, suggesting that Merkel may still opt for the central banking job.

Asked about the report, a spokeswoman for the German government declined to comment on Draghi’s possible successor, saying the matter would be decided later in the year.

She said Weidmann had carried out his duties as Bundesbank President effectively so it would be good if he continued.

Die Zeit said senior members of the government were looking at the possible effects of such a move by Weidmann as doubts were growing that German conservative Manfred Weber would succeed in a bid to become president of the European Commission.

Weber is head of the conservative European People’s Party (EPP) grouping in the European parliament which has faced criticism from some European liberals and Social Democrats for its links to Hungarian Prime Minister Viktor Orban.

“If Weber fails, then Weidmann becomes current again from a German point of view,” reported Die Zeit without identifying any sources or exactly where this view came from.

A government source told Reuters that it was far too early to judge who has the best chances of getting the ECB job.

(Reporting by Holger Hansen, Markus Wacket; Additional reporting by Andreas Rinke; Writing by Michelle Martin and Madeline Chambers; Editing by Toby Chopra)

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