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Weidmann still in race to replace ECB chief Draghi


Bundesbank President Jens Weidmann is in the running
Bundesbank President Jens Weidmann is in the running

In the race to succeed Mario Draghi as European Central Bank (ECB) president, Germany’s one-time favourite could yet stage a comeback.

Bundesbank President Jens Weidmann, who ended 2018 languishing in Bloomberg’s survey of economists behind three other rivals for the prize, may make up lost ground after a double boost in recent days.

First, Germany’s government decided, after apparent hesitation, not to propose a replacement for ECB chief economist Peter Praet, allowing Ireland’s Philip Lane to emerge unopposed for that job, and pointedly keeping alive Mr Weidmann’s candidacy.

Then Italy’s finance minister, Giovanni Tria, confirmed a thawing in his country’s opposition to the Bundesbanker when he told ‘Die Welt’ that he’s “open” to the prospect – and “unbiased.” The race to succeed Mr Draghi in November remains likely to be settled in a bout of horse-trading for EU positions, including the presidents of the Commission, the Council and the ECB, some time after European Parliament elections in May.

Mr Weidmann was the early favourite for economists, in a contest that was likely from the start to be dominated by northern Europeans, after southern Europe’s current turn with Italy’s Mr Draghi.

Former Finnish central bank Governor Erkki Liikanen, his successor, Olli Rehn, French Governor Francois Villeroy de Galhau and ECB Executive Board member Benoit Coeure are among contenders who might geographically qualify.

The German candidate’s opposition to quantitative easing has haunted his candidacy from the start, with some officials in European capitals from Rome to Paris worried he could become an even more powerful obstacle to stimulus in a future downturn.

While Mr Weidmann has tried to assuage such qualms, he hasn’t tempered his views on the need for stimulus withdrawal.

He told an audience last week that since normalising policy will take years, that’s “all the more reason not to squander any time”. His prospects slumped as fellow countryman Manfred Weber, leader of the largest bloc in the European Parliament, manoeuvred to replace Jean-Claude Juncker at the helm of the EU Commission. German Chancellor Angela Merkel was said to have decided it’s more useful for her government to secure that than the ECB role.

While that could still happen, Mr Weidmann, her former adviser, remains a potent pawn for the chancellor to deploy in the EU negotiations that will ensue.

Mr Weidmann’s candidacy also offers Germany the prospect to claim the prize of ECB chief that eluded it throughout the history of the euro, despite being Europe’s biggest economy, and the home and original inspiration for its central bank.

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Bloomberg

Irish Independent

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