COMMENT

The story of the Bundesbank President and German board members of the Council of the European Central Bank (ECB) is also long ago a story of resignations. The ECB is already making fun of the fact that Germans are always leaving office prematurely; even the German Pope in Rome had vacated the Holy See prematurely, not least the Italians in the ECB smirk.

It was only in mid-October that Jens Weidmann surprisingly announced his resignation as head of the Bundesbank at the end of the year, which means that he is also leaving the ECB. On Monday, Federal Chancellor Olaf Scholz (SPD) and Finance Minister Christian Lindner (FDP) announced that Joachim Nagel would be the new President of the Bundesbank want. The timing of the change is tricky, because inflation in Germany is six percent at its highest level in around 30 years.

Resignation follows resignation

After ten years at the Head of the bank for his decision officially stated personal reasons. But internally it was clear that his frustration with the line of European monetary policy and his limited impact in the Governing Council also played an important role. During the sovereign debt crisis around ten years ago, the

then Bundesbank and now UBS President Axel Weber

as well as the then German chief economist of the ECB, Jürgen Stark, resigned in protest against their monetary policy.

At this time, the ECB had launched its first program to buy government bonds, which the Bundesbank representatives seriously disliked. At that time, according to reports, there were even considerations to sue the ECB before the Court of Justice of the European Union (ECJ). In the meantime, the dams in terms of public financing by the central bank have long been broken. Since 2015, the ECB has mainly purchased government bonds from euro member countries in the amount of more than five trillion euros.

In mid-2019 Sabine Lautenschläger announced her resignation from the ECB Executive Board , she was mainly responsible for banking supervision. It was said, also because of the leadership style of the then President Mario Draghi to go. In fact, however, it could no longer take responsibility for always telling the commercial banks not to accumulate too great risks in the balance sheets, while the ECB balance sheet grew more and more, but the demands on the securities’ collateral decreased more and more.

Model only at the beginning

The Bundesbank was once considered a blueprint for the ECB when the monetary union was founded. But it only retained its role model for the first ten years. Under ECB boss Draghi and in view of the sovereign debt crisis and the subsequent calamities, the ECB Council moved more and more away from the Bundesbank tradition and increasingly took an example from the generous Anglo-Saxon type of monetary policy that many highly indebted countries in the Euro zone passed well.

In Berlin the distance of the ECB from the Bundesbank line with its ordoliberal regulatory orientation and strict separation of monetary and fiscal policy

perceived by the governing parties with a shrug at best. Angela Merkel, the appointment of the EU Commission President has always been much more important than that of the top management of the ECB.

Accordingly, the Bundesbank only has the role of perpetual warning in the Governing Council. Nothing about that will change with Joachim Nagel either. In the German media he is considered a classic compromise candidate because of his SPD membership – and in fact there were other possible Weidmann successors whose appointment would have been tantamount to the final surrender of the Bundesbank.

The tradition of the house

But Nagel spent a large part of his career in the Bundesbank, and it will now be shaped again by the tradition of the house. Weidmann was also a councilor in tone, but he hardly yielded in his demeanor, and he achieved little. In this respect, it should mean for the Bundesbank: new president, old problems. Nagel now has to look for a balance between the Bundesbank tradition and influence in the ECB in order to assert himself. He also has the burden of not being able to resign prematurely, because that would further damage the reputation of the Bundesbank.

You can contact the business editor Michael Rasch on Twitter, Linkedin and Xing and NZZ Frankfurt on Follow Facebook .

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