BERLIN -- After a decade as head of Germany's central banking, the chief announced Wednesday that he would be retiring. This will remove a key hawkish voice in the European Central Bank's governance council.
According to the Bundesbank, Jens Weidmann will be leaving office in the middle of the year due to personal reasons. The 19 eurozone national central bank governors have a seat in the ECB's governing board. Weidmann was the chief skeptic for expansive stimulus policies such as bond buying.
In a letter to bank staff, Weidmann stated that "I have come up to the conclusion" that 10 years is enough time to turn the page -- not only for the Bundesbank but also for myself personally.
Although he only has one vote in the 25-member governing board, his voice is amplified as he is from the largest economy of the eurozone. He is a vocal advocate for restraint when it comes to buying government bonds from member countries. This is a move the European Central Bank took to support growth and lower long-term interest rates.
"This is a critical time for the ECB. "The camp of the hawks has lost an important voice," Carsten Brazeski, an economist at ING Frankfurt, stated in a research paper.
Brzeski said that the prospects of higher inflation, herd immunity, and an economy returning back to pre-crisis levels by the end of this year make it a compelling argument to withdraw the ECB’s emergency stimulus and reduce asset purchases. "Maybe Weidmann's last success at the December meeting of the ECB as Bundesbank president will be the decision to do this."
Weidmann, the fourth German member on the governing board, has resigned. The European Central Bank has taken an expanded view of its mandate by bond purchases and ultra low rates for extended periods.
Christine Lagarde, President of European Central Bank, stated that she respected but also regretted the 53-year-old member of the governing board's decision.
Lagarde stated in a statement that Jens held clear views on monetary policies, but that he was always impressed by his efforts to find common ground within the Governing Council, his compassion for his Eurosystem colleagues and his willingness for compromise.
The German government nominates Bundesbank presidents. Weidmann's announcement is made as Germany prepares to put together a new government following the Sept. 26 elections. Steffen Seibert, Merkel's spokesperson, stated that the chancellor received it with regret and great respect.
Seibert stated that "it will now be the responsibility of a new government...to find a successor to the stability-oriented legacy the Bundesbank has left,"
Social Democrats from the center are in talks with Greens and Free Democrats to form a coalition that would replace Merkel's centre-right Union bloc. Olaf Scholz (the outgoing Finance Minister) hopes to be elected chancellor and put the government in place before Christmas.
Scholz thanked Weidmann via Twitter for his "exceptional devotion."