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Sunday 19 November 2017

Merkel adviser to take over as German bank boss

Analysts predict few changes to country's anti-inflation policy

Jens Weidmann: opposed the bailout of Opel last year. Photo: Getty Images
Jens Weidmann: opposed the bailout of Opel last year. Photo: Getty Images
Thomas Molloy

Thomas Molloy

GERMANY's central bank will soon be led by 42-year-old high flier Jens Weidmann, who has been at Chancellor Angela Merkel's side for the past five years as she battled to reform the German economy and organise the bailouts for Ireland and Greece.

Mr Weidmann, who will become the youngest ever head of the Bundesbank, replaces Axel Weber who will leave the Bundesbank on April 30 following clashes with several eurozone central bankers over plans for the European Central Bank (ECB) to buy bonds of euro-area countries. Mr Weber plans to return to his professorship at Cologne University by the end of this year.

Where Mr Weber was abrasive and outspoken, Mr Weidmann is softly spoken and friendly, but most analysts say the two men share a similar hatred of inflation and predict few changes to the country's hawkish approach to economics when the ECB meets.

Mr Weidmann has not always agreed with Ms Merkel -- he opposed the bailout of Opel when the carmaker almost went bust last year and urged the chancellor to resist quick aid for Greece and to involve the International Monetary Fund (IMF) in any European aid programme, winning both arguments over the opposition of Finance Minister Wolfgang Schaeuble.

Putting distance between himself and the chancellor in his new post and embracing his status as a public figure, after a career of influencing policy from the shadows, will be among Mr Weidmann's biggest challenges.

Mr Weidmann's background resembles Irish Central Bank governor Professor Patrick Honohan, although the German is probably more of an inflation hawk. Like Prof Honohan, Mr Weidmann is an academic who has advised prime ministers and worked in large institutions such as the IMF.

This willingness to take risks and get their hands dirty with every-day politics distinguishes the two men from most other economists.

Mr Weidmann will take over a central bank that is conservative and resistant to change.

Mr Weidmann, who has helped Rwanda restructure debts and is known as a friend of Africa, will sit on the ECB's executive board, which runs the day-to-day affairs of the institution that sets monetary policy for the 17 euro countries.

Appointing Mr Weidmann to the Bundesbank meant Germany may not insist on a German candidate to become ECB president later this year, analysts said yesterday.

Mr Weber said last week Mr Weidmann would make a good replacement, calling him an "absolute professional" and "excellent economist".

"He would live and breathe his new job from day one in any capacity," Mr Weber added.

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