‘Passionate’ about central banking (Brendan Smialowski)

Frankfurt am Main (AFP) – Germany’s finance ministry on Wednesday said it planned to extend current Bundesbank president Jens Weidmann’s contract by another eight years, keeping the central bank chief in the race to replace Mario Draghi at the European Central Bank.

“We can confirm that the federal government intends to propose prolonging Jens Weidmann’s term at the head of the Bundesbank,” a ministry spokesman told AFP.

The extension still has to be formally greenlighted by the German cabinet, a step considered a formality.

Weidmann, 50, took the helm of the powerful Bundesbank in 2011. His term is due to end on May 1.

“Jens Weidmann is a passionate central banker and Bundesbank president and is looking forward to a second term,” the bank said in a statement.

Although Chancellor Angela Merkel’s government has not openly endorsed Weidmann to succeed ECB chief Draghi, whose mandate expires in November, it’s customary for the high-profile post to be held by an acting central bank governor from the 19-nation euro area.

Weidmann’s chances appear slim however, since Berlin is already backing Merkel ally Manfred Weber’s candidacy to become the next head of the European Commission, and having two Germans in top EU roles is an unlikely prospect.

Seen as one of the most hawkish voices on the ECB’s governing council, heavyweight central banker Weidmann has also been a fierce critic of Draghi’s ultra-loose monetary policy aimed at reviving the eurozone economy after the crisis.

He long pushed for a swifter end to the ECB’s massive government and corporate bond-buying scheme designed to encourage spending and investment, which the German said risked blurring the lines between fiscal and monetary policy.

The ECB finally ended the scheme last month after nearly four years. Along with record-low interest rates, the stimulus programme has been credited with staving off the threat of deflation and bolstering growth.

Weidmann, a staunch defender of the Bundesbank’s role as a guarantor of monetary stability, also vehemently opposed Draghi’s 2012 promise to buy up, if necessary, unlimited bonds from debt-stricken countries.

Weidmann was the only governing council member to vote against the crisis-fighting tool.

The scheme, known as Outright Monetary Transactions (OMT), has never been used.

Disclaimer: This story is published from a syndicated feed. Siliconeer does not assume any liability for the above story. Validity of the above story is for 7 Days from original date of publishing. Content copyright AFP.