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The term of office of President of European Central Bank (ECB) Mario Draghi ends in November 2019 after eight years. Jens Weidmann, head of Deutsche Bundesbank, is given good opportunities for his succession. The political and economic scientist Pawe? Tokarski of Science and Politics Foundation explains in this guest contribution why a German president of ECB is not necessarily best for Germany.
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The ECB presidency is one of most important positions in euro area. The Spaniard Luis de Guindos has taken over post of Vice president at beginning of June, now race for succession of Mario Draghi is opened. The Italian and two or members of governing Board of ECB must be replaced between 2018 and 2019. At same time, discussion on future of monetary union will continue to take hold.
The German public is concerned about ECB’s expansive monetary policy. It could be a calming signal in direction of normalization if ECB’s top position is filled with current Bundesbank president, Jens Weidmann. The German “takeover” of ECB could sell German policy as a success. However, such a scenario could also entail more risks than profits for Germany.
The ECB must continue to stabilise euro with monetary policy
It is obvious that eurozone is in a much better state than it was in year 2010. The establishment of permanent European Stability Mechanism, development of banking union and possibility of Outright monetary transactions for countries in financial difficulties contributed a great deal to this development. However, re is no guarantee that crisis will not return after end of expansive monetary policy. The current populist and Eurosceptic government in Italy is questioning future of third largest economy in euro area and of monetary integration in Europe.
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If economy in euro area slips into next crisis, German ECB president would be in operational centre of Antikrisenstrategie. The ESM does not have sufficient financial resources to save largest members of euro eurozone like Italy. And in 19 euro countries re is little willingness to share more risk. That is why ECB will have to continue to stabilise monetary union with its monetary policy. Any conflicting signs from Frankfurt headquarters would endanger confidence in monetary union.
