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05/12/2016

Berlin set to insist on home-grown ECB president

Euro & Finance

Berlin set to insist on home-grown ECB president

CSU politicians want the next president of the European Central Bank (ECB) to be German, as Berlin grows increasingly exasperated with the bank’s policies. EurActiv Germany reports.

“Mario Draghi’s policies have greatly undermined the credibility of the ECB,” the deputy chief of the CSU’s parliamentary faction, Hans-Peter Friedrich, told Bild. Draghi’s successor must “be a German, who feels an allegiance to the Bundesbank’s tradition of currency stability,” he added.

The party’s foreign policy expert, Hans-Peter Uhl, criticised, among other things, the bank’s current zero-interest policy. “We cannot afford another Dragi,” Uhl told the same paper. “We need a German financial specialist at the head of the ECB.”

Federal Finance Minister, Wolfgang Schäuble, has recently voiced his mounting concerns about the ECB’s policies; Berlin has in the past avoided directly commenting on the Frankfurt-based institution, so as to avert accusations that it is attempting to influence the bank on policy.

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The ECB must remain independent from individual member state or other European institution influence, according to its statutes.

At the same time, national governments are expected “to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or the national central banks in the performance of their duties”.

Draghi’s eight-year-long term runs until 2019; after which an extension is not possible. The president is appointed by EU heads of government and state, via qualified majority. Germany would therefore be well-placed to get what it wants, given that it has the most votes because of its large population size. It will be unable to push through its candidate alone though and will have to convince other member states to support it.

Potential candidates must hold EU citizenship and have a background in monetary policy.

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Germany is yet to provide an ECB president. The first holder of the position was Dutchman Wim Duisenberg, who was appointed in 1998. He was followed in 2003 by France’s Jean-Claude Trichet, and by the Italian Draghi, in 2011.

During Trichet’s tenure, then Bundesbank President Axel Weber was seen as the most promising candidate. But in spring 2011, Weber unexpectedly resigned and then switched to Swiss bank UBS, amid tension attributed to unease about the ECB’s monetary policy.