‘Not all Germans believe in God, but they all believe in the Bundesbank’
Tall, soft-spoken and polite, Bundesbank boss Jens Weidmann tends to wear his responsibility lightly
Jens Weidmann: “I assume that Ireland, now out of the programme, will be able to meet its commitments without any external assistance.” Photograph: Kai Pfaffenbach/Reuters
The Bundesbank headquarters on the edge of Frankfurt is a brutalist bunker that exudes a forbidding air.
By the time it opened its doors here in 1972, the Bundesbank had been operational for 15 years and had established itself as a guardian of both the deutschmark and West German prosperity.
It anchored itself as one of the country’s most trusted institutions so effectively that former European Commission president Jacques Delors remarked in 1992: “Not all Germans believe in God, but they all believe in the Bundesbank.”
The recent euro crisis and subsequent rescue measures, from bailouts to bond-buying, have dented that belief and confirmed many Germans’ long-held fears about currency union.
The European Central Bank was established in the Bundesbank’s image but many here worry the son, having turned on the father, has now gone rogue. The Bundesbank, so the argument goes, has moved from being the euro system’s first-among-equals to its hostage.
Outside Germany, meanwhile, the Bundesbank has been attacked as always giving too little, too late in the euro crisis, with US economist Paul Krugmann dubbing the Bundesbank’s last president, Axel Weber, a “risk for the euro’s fate”.
This was the burden awaiting Jens Weidmann when, in 2011, the 45-year-old economist became the youngest president in the bank’s history after Prof Weber’s walkout in protest at ECB monetary policy under then president Jean-Claude Trichet, paving the way to Mario Draghi’s ECB presidency.
Tall, soft-spoken and polite, Dr Weidmann wears his responsibility lightly. Far less austere than either his predecessors in Frankfurt, or the Bundesbank’s exterior, a former economics professor remembers him as someone who “prefers taking partners to one side for a talk than banging on the table”.
Dr Weidmann jokes that, given his own run-ins with the ECB of late, not everyone will believe that assessment. But, even in fundamental conflicts, he says he tries to keep things professional.
“In trying to convince people and achieve something, it’s always better to exchange arguments than drift into personal conflict,” he said.
It’s a trait he shares with Angela Merkel, for whom he worked for five years as economic adviser in Berlin through the testing times of the financial and euro crises.
Since returning to Frankfurt, however, he has had to eschew the German leader’s trademark political pragmatism and don the doctrinaire cloak of the Bundesbank, where a stable currency is king, inflation control is queen and political influence on monetary policy is verboten.
While Dr Merkel welcomed Mr Draghi’s promise that the ECB would “do whatever it takes” to save the euro – calming financial markets in the process – Dr Weidmann warned that the subsequent “Outright Monetary Transactions” (OMT) bond-buying capability could trigger the ECB’s capture by politics.
That said, the German chancellor and her former adviser remain on the same page on the causes – and thus cures – of the euro crisis: as a crisis of debt to be solve not with more debt but with structural reform as a prerequisite for external financial assistance.