Economist joachim nagel to become new president of the bundesbank. German chancellor olaf scholz (SPD) and finance minister christian lindner (FDP) proposed the 55-year-old to succeed jens weidmann, as lindner announced on twitter on monday.
Previously, the "handelsblatt" and the "spiegel" had reported on the appointment. The appointment still has to be finally decided by the cabinet. This is expected to happen this wednesday, said a government spokesman. Nagel is to take office on 1. January to start work.
Weidmann resigns for personal reasons
Weidmann had announced in october that he would leave office on 31 december after more than ten years in office. December resignation for personal reasons. Nagel, who is a member of the SPD, was already a member of the bundesbank’s executive board from 2010 to 2016, after which he moved to forderbank k and currently works at the bank for international settlements (BIS), which is also known as the central bank of central banks. He studied economics in his native city of karlsruhe and earned his doctorate at the university there.
Lindner stressed that in view of inflation risks, the importance of a stability-oriented monetary policy is currently growing. Nagel is "an experienced person who will ensure the continuity of the bundesbank". Nagel stands for monetary policy stability, the appointment is a "good signal to the german people as well as to europe.
Banking associations and economists welcomed nagel’s nomination. This means that "an expert with many years of experience in central banking and an excellent knowledge of the financial markets will be at the helm of the german central bank," said the president of the federal association of german banks (bdb), deutsche bank CEO christian sewing. Savings bank president helmut schleweis is convinced that with nagel at the helm, the bundesbank will "continue its tradition of a stability-oriented monetary policy.
Bavaria’s finance minister albert furacker (CSU) also called on nagel to continue the bundesbank’s stability-oriented course. "I am also counting on the new bundesbank president-designate to resolutely counter the misguided developments of the ultra-loose monetary policy in the euro area," he said. The european central bank (ECB) is increasingly softening the boundaries between monetary and fiscal policy; crude purchases of government bonds had to stop.
Weidmann, former economic advisor to long-serving chancellor angela merkel, also repeatedly voiced criticism of the ECB’s ultra-loose monetary policy that has been in place for years. He was especially skeptical about the billions of dollars in bond purchases and warned that the central bank should not make governments dependent on cheap central bank money.
In view of rising inflation, weidmann warned that europe’s guardians should not ignore the risk of too high inflation and should not stick to their very expansionary course for too long. Weidmann’s stance has often not prevailed. Because the supporters of a rather loose monetary policy have the majority in the ECB’s governing council.
Although the president of the bundesbank participates in the decisions of the central bank’s highest decision-making body, he has only one vote, as do the representatives of the other 18 euro countries – even though germany is europe’s largest economy.
Hopes for savers
The president of the federal association of german volksbanken and raiffeisenbanken (BVR), marija kolak, associates nagel’s appointment among other things with the hope that the bundesbank in the ECB’s governing council "will work for an early end to minus interest rates in the interests of savers".
According to stefan kooths, head of the economic department and vice president of the institute for the world economy (i/kiel), nagel was among those "who put forward counter-arguments to the current ultra-expansive monetary policy. But kooths qualified: "at the same time, nagel’s appointment does not change the majority situation in the ECB’s governing council. The supporters of the loose monetary policy can therefore look forward to the new head of the bundesbank."The first monetary policy meeting of the ECB’s governing council in the new year is scheduled for 3. February.