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Abu Dhabi, UAEThursday 20 September 2018

Germany's Widemann eyes ECB top job, Finland's  Liikanen less bullish

Bundesbank president drops strongest hint so far that he wants the role when Mario Draghi steps down

Jens Weidmann, president of the Deutsche Bundesbank, has signalled he wants to lead the European Central Bank. Krisztian Bocsi/Bloomberg
Jens Weidmann, president of the Deutsche Bundesbank, has signalled he wants to lead the European Central Bank. Krisztian Bocsi/Bloomberg

Jens Weidmann signalled he’s open to succeeding Mario Draghi as president of the European Central Bank, the Bundesbank chief’s strongest hint so far that he wants the job.

“I believe that every member of the Governing Council should have the willingness to contribute to monetary policy also in a different role,” the German told Funke Mediengruppe in an interview published Saturday.

Mr Weidmann said that public discussion of who will follow in Mr Draghi’s footsteps at the end of 2019 has started “much too early.” Euro-zone governments are unlikely to decide on a successor this year.

The German, who became Bundesbank president in 2011, has himself stoked talk of the ECB succession race in a series of comments responding to questions about his status as the perceived front runner.

In an interview with the Financial Times published in February, Mr Weidmann - one of the most hawkish central bankers in the 19-nation region - discussed his views on the ECB presidency at length. The newspaper then likened him to the 12th century archbishop of Canterbury Thomas Becket, referring to how an institution can change the convictions of the person who runs it.

Meanwhile, the outgoing Bank of Finland governor Erkki Liikanen said there may be circumstances under which he would consider succeeding Mr Draghi but that he won’t be campaigning for the job.

Asked in an interview on Finland’s YLE TV1 on Saturday whether he is available for the position when it opens in the second half of 2019, Mr Liikanen, 67, said such discussions always begin too early.

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“I’m not going to be campaigning for any task,” he said. “There may be situations where you get asked: ‘will you do your duty?’ And then one must consider.”

Mr Liikanen is stepping down as Bank of Finland governor in July after serving two seven-year terms at the helm of the Helsinki-based central bank. Olli Rehn, deputy governor and former European commissioner for economic and monetary affairs, was appointed his successor on Friday.

Asked whether he has become less hawkish in his monetary policy stance, which might make him a compromise candidate against Mr Weidmann, Mr Liikanen said his stance on price stability is “completely unchanged”.

“When inflation accelerates to more than 2 per cent, which is our target, then I demand raising interest rates,” Mr Liikanen said. “When it remains considerably below that level, we must stimulate. My stance is symmetrical regardless of whether we are above or below our target: we need to be just as decisive.”

Mr Weidmann, who is 50, clearly liked the analogy. He used it just days later in describing incoming ECB vice president Luis de Guindos. The Spaniard’s move directly from the helm of his country’s Economy Ministry has raised eyebrows in Frankfurt and elsewhere because of the implications for ECB political independence.

In his interview with Funke, which will be published in a number of German newspapers as well as Ouest-France, Mr Weidmann also reiterated his call for ending asset purchases soon. Investors predict bond buying won’t continue beyond the end of the year and “I consider that thoroughly plausible because the economy in the euro area is doing markedly well and businesses are very much working to capacity.”

The ECB’s Governing Council next meets on June 14 to set monetary policy. So far, officials have refrained from discussing their strategy to unwind unprecedented stimulus. With bond purchases scheduled to expire in September and investors turning their attention to when interest rates may begin to rise, pressure is mounting on policy makers to explain the path ahead.

“I consider it prudent to provide clarity soon and announce an end date,” Mr Weidmann said, adding that monetary policy will remain accommodative for a long time even after purchases stop.

“The road back toward normalisation will be a very long one.”

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