Weidmann considered quitting, Bild says
The president of the Bundesbank considered resigning in a show of discontent over ECB plans to intervene in sovereign debt markets, a German publication has reported. Jens Weidmann was dissuaded by senior figures in the government, according to Bild newspaper.
The Bundesbank declined to comment on the report, which comes as the ECB drafts a plan to purchase sovereign debt to drive down borrowing costs for eurozone member states such as Spain.
Mr Weidmann has repeatedly made clear that he has deep misgivings about the ECB’s determination to press ahead with a scheme. Details of how the ECB might intervene – subject to struggling borrowers making official requests for EU help – are expected to be revealed next week by Mario Draghi, ECB president.
While the Bundesbank is the most powerful and global national central bank in the eurozone – by virtue of the size of the German economy and its record in maintaining a strong currency in the pre-eurozone era – it cannot veto proposals put to the ECB’s governing council, where all national central banks wield just one vote.
But Bundesbank opposition is a factor that may complicate Mr Draghi’s efforts to construct a bond-buying scheme that convinces financial markets of the strength of the ECB’s resolve. Mr Draghi said last month he would do “whatever it takes” to keep the eurozone intact.
A German government spokesman said Angela Merkel, chancellor, supported Mr Weidmann and believed he should have “as much influence as possible” at the ECB.
In an interview published last week by Spiegel, the German magazine, Mr Weidmann denied he would end up resigning, saying “[I could] carry out my duty best if I remain in office”.
He “knew the situation that awaited me” when moving to the Bundesbank – and thus to the ECB’s governing council – last year, Mr Weidmann said.
Mr Weidmann’s predecessor, Axel Weber – now chairman of UBS – quit the post last year owing in part to his longstanding discomfort at the ECB’s initial decision to embark on bond purchases in 2010. Also, last year Jürgen Stark, a former Bundesbanker and an executive board member at the ECB, also resigned. He said this month it was a protest at the ECB’s crisis management, in which he said the central bank had “repeatedly crossed red lines”.
The report of Mr Weidmann’s dilemma over resigning follows a call by Jörg Asmussen, a senior ECB official, for the International Monetary Fund to take part in overseeing reforms made by eurozone countries that request financial help.
His call reinforces the idea that the central bank will insist on governments living up to reform pledges before it intervenes to purchase their sovereign bonds.
“From my point of view this means that the IMF will be involved in setting the economic adjustment programmes because the IMF of course has unique knowhow and has high leverage as an external policeman in these cases,” Mr Asmussen said in a speech in Potstdam.