There has apparently been movement in the debate over who should succeed Mario Draghi as president of the European Central Bank (ECB). Jens Weidmann, head of Germany's central bank, the Bundesbank, has clarified that he now considers Outright Monetary Transactions (OMT) – an instrument that has proven controversial in Germany – to be consistent with European law and that he feels obligated to uphold the policy. "The European Court of Justice has examined OMT and determined it to be legal. Moreover, OMT is current policy," Weidmann told ZEIT ONLINE.
The ECB Governing Council adopted the emergency measure at the height of the euro crisis to prevent the monetary union's collapse. The program allows the ECB to purchase sovereign bonds from individual countries in cases where interest rates on those bonds climb too high. Thus far, the program has not had to be activated, but according to many experts, the mere fact of its existence served to calm the markets.
It had been unclear until now whether Weidmann accepted the instrument, which he was critical of at the time of its introduction. That criticism has led to resistance from Southern European member states to his possible nomination to take over the presidency of the ECB. This lack of clarity has now been resolved. "My position, though, was not legally based. It was driven by the concern that monetary policy could get caught in the wake of fiscal policy. Of course, a central bank must act decisively in the worst-case scenario, but given its independence, there should be no doubt that it is acting within the framework of its mandate," Weidmann told ZEIT ONLINE.
Manfred Weber's Chances Decline
The leaders of the EU member states are meeting on Thursday and Friday in Brussels to potentially make preliminary decisions about the new leadership of important EU institutions. In addition to the position of ECB president, leaders must agree on the new heads of the European Commission and the European Council.
Berlin is now preparing for the possibility that Manfred Weber may not be chosen to head up the European Commission because he lacks sufficient support in the European Parliament. His candidacy is also not without controversy in the German government. Sources say that there is resistance to Weber within the Social Democrats (SPD), Merkel's junior coalition partner. The SPD would rather see Frans Timmermans, a Social Democrat from the Netherlands, be installed as Commission president. That could ultimately prevent Chancellor Angela Merkel from voting for Weber for the position. EU heads of state and government are responsible for formally nominating a candidate for Commission president, which is then sent to the European Parliament for ratification.
The result is that Berlin will likely shift is political energy to a different EU leadership post so that Germany does not go emptyhanded. That's why the position of ECB presidency is now receiving more attention.
Translated by Daryl Lindsey