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ECB Hawk and German Central Bank Chief Jens Weidmann Quits, Cites Personal Reasons

Alex Kraus | Bloomberg | Getty Images
  • He has been in charge of the German central bank since 2011 — at the height of the sovereign debt crisis in the euro zone.
  • Weidmann has been one of the biggest names within the decision-making body of the ECB.
  • He is famous for his more conservative views on policy.

European Central Bank member Jens Weidmann announced Wednesday he will be stepping down as governor of the German central bank at the end of the year due to personal reasons.

"I have come to the conclusion that more than 10 years is a good measure of time to turn over a new leaf — for the Bundesbank, but also for me personally," Weidmann said in a letter to the bank's staff.

He has been in charge of the German central bank since 2011 — at the height of the sovereign debt crisis in the euro zone. Throughout his tenure, Weidmann has been one of the biggest names within the decision-making body of the ECB, famous for his more conservative views on policy.

Weidmann's departure comes at a time when the ECB has a difficult choice to make over what to do with higher inflation across the region. Speaking about ECB policy on Wednesday, Weidmann said the bank played a "stabilizing role of monetary policy during the pandemic" and highlighted the recent decision to have a "symmetrical, clearer inflation target."

"Side effects and in particular financial stability risks are to be given greater attention," he said.

Some analysts have contemplated whether his departure has a link to the current monetary policy stance of the ECB.

"The next hours and days might reveal whether there are any reasons related to the ECB's current monetary policy stance and inflation assessment involved in Weidmann's decision," Carsten Brzeski, global head of macro at ING, said in a note Wednesday.

He added that Weidmann's announcement "comes at a crucial time for the ECB. The camp of the hawks is losing an important voice."

Within the German political scene, Weidmann's decision also means that the incoming German government, likely led by the socialist SPD party, will play a role in the choice of the next governor.

Andrew Kenningham, chief Europe economist at Capital Economics, said that "the new (Bundesbank) President is likely to be more supportive of the generally dovish and 'green' direction in which Christine Lagarde is leading the ECB."

Lagarde regret

Meanwhile, ECB President Christine Lagarde issued a statement to say she respects the decision, "but I also immensely regret it."

"As the Governing Council`s longest serving member he had unparalleled experience that he was always ready to share," Lagarde said, highlighting Weidmann's contribution to the recent strategy review the central bank put together.

"I will miss Jens and his always constructive and good-humoured approach in all of our discussions," Lagarde added.

 

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