Weidmann And The Future Of The ECB

The European Central Bank (ECB) is one of the most powerful central banks in the world. It controls the monetary policy for the 19 European Union countries which have adopted the Euro. Together these countries have a combined GDP of over $11 US trillion. The ECB’s primary task is to maintain “price stability in the euro” area and so preserve the purchasing power of the single currency.

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The current ECB president, Mario Draghi, is Italian and he will leave his position in November 2019. He is credited for getting the European economy back in order since 2011. Many believe that the next head of the ECB could come from Germany.

 The latest poll suggests that there is an 84 percent probability that Jens Weidmann, the head of the Bundesbank, Germany’s central bank, will ultimately take Draghi’s place. In fact, this is what the world is expecting and what the currency markets have priced in at the moment.

As head of the Bundesbank, Weidmann is in charge of possibly Germany’s most renowned institution. As the French politician and former head of the European Commission Jacques Delors once said in 1992 that, “not all Germans believe in God, but they all believe in the Bundesbank.” He may be popular in northern European countries. But Weidmann has had very public disagreements with Draghi in the past over economic policies. As someone who is more hawkish, Weidmann want to prefer to tighten monetary policy more quickly. His opposition “to the ECB’s quantitative-easing program and, earlier, to Draghi’s pledge to do “whatever it takes” to preserve the Euro currency thought to provoke unease in southern Eurozone countries.

But no decisions have been set in stone yet. There are still other candidates for the next ECB president. For the time being Weidmann contents himself with offering satisfactory praise for Draghi’s hard work. But at the same time he also cautions that the ECB shouldn’t do too much to bail out weaker members of the eurozone. “The ECB [is] certainly an institution that functions well,” Weidmann claims. “But this cannot be an argument for us to take over the role… of governments.”