Olaf Scholz Eyes Joachim Nagel To Lead Germany’s Bundesbank
Olaf Scholz is just days away from taking the reins of Europe’s largest democracy from longtime Chancellor Angela Merkel. And one of the first priorities facing him upon his ascension will be to appoint a new leader of the Bundesbank, Germany’s central bank, long believed to play an outsize role in the European System of Central Banks.
And according to the FT, which cited several high-ranking sources familiar with the leader of Germany’s new “stop sign” coalition and his thinking, Scholz’s top choice is Joachim Nagel, a top executive at the Bank for International Settlements.
The 55-year-old Nagel would be no stranger to the institution; he spent most of his career at the Bundesbank before joining the BIS as deputy head of the banking unit last year. He has spent most of his career supervising capital markets. If chosen, Nagel would be succeeding Merkel’s longtime central bank chief, Jens Weidmann. Known for his conservative leanings, Weidmann was forced to accept Germany abandoning its commitment to a balanced budget in the face of the lockdowns adopted in the face of COVID.
Weidmann announced last month that he would step down at the end of the year. Presumably, the incoming leadership will look to install a replacement as quickly as possible.
To be sure, the FT managed to identify a few other potential candidates for the top job at the central bank. Other contenders for the role included Isabel Schnabel, a member of the ECB’s executive board, and Jörg Kukies, a state secretary in the finance ministry. However, it’s believed that they are no longer in the running. But nothing has been finalized yet.
One source told the FT that Scholz was leaning toward Nagel in order to put a “central banker not an academic” in charge at the bank. But whoever leads the Bundesbank next will be arriving at a particularly tense period in its history. Officials have grown worried by the surge in eurozone inflation to a record high of 4.9% last month, well above the European Central Bank’s 2% target. As President Biden has claimed, runaway inflation isn’t unique to the US. Since the dawn of the EU era, the Bundesbank has positioned itself as a check against the ECB’s excesses. And it has long expressed discomfort with the ECB’s bond-buying program, and former ECB chief Mario Draghi’s “whatever it takes” mantra.
From the looks of it, Nagel likely doesn’t possess the same appetite for fiscal prudence.
Nagel reportedly built support by talking to leaders from all three parties in the ruling coalition. Still, whether or not he is ultimately chosen to lead remains to be seen.
Thu, 12/02/2021 – 15:45