Economist Joachim Nagel will be the next president of the Bundesbank, Germany’s central bank, replacing Jens Weidmann, who will step down at the end of the year. Nagel knows the institution perfectly, of which he was an advisor for many years, and is considered close to the Social Democrats, who rule the country in an unprecedented tripartite with Liberals and Greens after the electoral victory of Olaf Scholz in September.
The Minister of Finance, the liberal Christian Lindner, has confirmed on his social networks that the Chancellor, Olaf Scholz, and himself have proposed him to occupy the position. “In view of inflation risks, the importance of a stability-oriented monetary policy is increasing. He is an experienced person who ensures continuity in the Bundesbank ”, has written about him Lindner. The decision could be formalized at the cabinet meeting this week, on Wednesday, or moved to the first one next year.
Nagel, 55, worked for the Bundesbank for 17 years, six of them as a member of the board of directors specializing in markets and information technology. In 2017 he left the institution to go to the public bank KfW and three years later he joined the Bank for International Settlements (BIZ) in Basel as deputy director of banking. Early in his career he worked as an economic advisor to the SPD. His name was circulating as the highest ranked candidate to succeed Weidmann since the beginning of the month. The economic newspaper Handelsblatt has advanced his appointment.
Nagel’s appointment coincides with a delicate moment at the European Central Bank (ECB), where two currents argue about how to respond to the increase in inflation, which has climbed to more than double the 2% target. In Germany it exceeded 5% in November, the sixth consecutive increase and the highest level since 1992, spurred by rising energy prices, especially heating oil.
Weidmann objected to the ECB’s decision last week to extend stimulus, warning that inflation could pulverize the institution’s projections. Analysts also wonder how he will position himself on what many critics in Germany see as an excessively expansionary policy by the ECB that favors weaker economies and hurts German savers.
Weidmann, the hawk who embodied the fierce opposition to Mario Draghi within the ECB, in October asked the President of Germany, Frank-Walter Steinmeier, his dismissal on December 31 as president of the Bundesbank. “I have come to the conclusion that more than 10 years is a good measure of time to turn a new page, for the Bundesbank, but also for me personally,” he explained in a letter sent to the workers of the institution in which he took advantage to launch a warning against the risk of inflation. He will leave office more than five years before the end of his term, which is eight years.
Know in depth all the sides of the coin.
Isabel Schnabel, German representative on the ECB’s executive committee and another of the possible candidates to replace Weidmann, has congratulated Nagel on her Twitter account. “I look forward to our collaboration in the Governing Council of the ECB. We have many important tasks ahead of us ”. Also Marcel Fratzscher, president of the DIW economic institute, who like Schnabel sounded strongly in the pools, has congratulated the next president of the Bundesbank. “It will represent Germany in an excellent way,” he wrote on the social network. “He brings a wealth of experience in financial markets and financial stability,” he adds. Christine Lagarde, president of the ECB, has ensured that she is “really looking forward to working with such an experienced central banker.”
I warmly congratulate Joachim Nagel on his nomination as President of Deutsche @Bundesbank.
– Christine Lagarde (@Lagarde) December 20, 2021
The Frankfurter Allgemeine publishes that many veteran officials of the institution are satisfied with the appointment because they believe that it will not deviate too much from the course that Weidmann had printed on the Bundesbank. In that sense, they consider him a better option than Schnabel or Fratzscher.