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Jens Weidmann needs to recant his opposition to Mario Draghi's signature crisis tool if he is to succeed the Italian at the helm of the European Central Bank, according to one of the German government's council of economic advisers.
The Bundesbank president, who is vying to replace the ECB chief, publicly contested the creation of the so-called Outright Monetary Transactions measure created at the height of the region's sovereign debt crisis. Isabel Schnabel of the University of Bonn told Anna Edwards and Matt Miller on Bloomberg Television that he can't maintain that view if he wants the top job.
“He's certainly a very qualified candidate,” said Schnabel, one of a panel of five economic advisers to Chancellor Angela Merkel's government. “What will be critical is whether he's going to change his attitude toward the OMT.”
Draghi unveiled the tool to elaborate on the pledge he made in July 2012 that the ECB would do “whatever it takes” to save the euro, an announcement that subsequently proved a turning point to years of market turmoil. Weidmann opposed that policy, and together with his later dissent on the need for quantitative easing has proven a sticking point in his ECB candidacy.
“The ‘whatever it takes' is crucial to the stability of the euro area, and in the past of course, Jens Weidmann has been very critical,” Schnabel said. “He would have to adjust that attitude.”
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She also responded to Weidmann's reputation as a monetary policy hawk, suggesting the Bundesbank head is ultimately a pragmatist.
“I wouldn't underestimate him,” Schnabel said. “If he became the head of the ECB, of course, he would have a different role and so I wouldn't worry about that too much.”
To contact the reporter on this story: Craig Stirling in Frankfurt at cstirling1@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien
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