The big question remains: is Nagel maintaining the critical course of his predecessor towards the ECB majority?
(Photo: dpa)
Berlin, Frankfurt The economist Joachim Nagel replaces Jens Weidmann at the head of the Bundesbank. Federal Chancellor Olaf Scholz (SPD) proposed the 55-year-old for this post, the Handelsblatt learned from government circles. Scholz has the right to propose, but changes should be made in agreement with Federal Finance Minister Christian Lindner (FDP).
As already known, Nagel is considered a “stability-oriented social democrat” in the FDP. The approval is therefore considered certain. Nagel worked for the Bundesbank for 17 years – six of them on the board. In 2017 he moved to the Kreditanstalt für Wiederaufbau (KfW) and then in 2020 to the Bank for International Settlements (BIZ), where he is Deputy Head of Banking.
Finance Minister Lindner wrote on Twitter: “In view of inflation risks, the importance of a stability-oriented monetary policy is growing. He is an experienced personality who ensures continuity for the Bundesbank. “
Isabel Schnabel, Director of the European Central Bank (ECB), who was also considered to be a possible occupation for the head of the Bundesbank, immediately tweeted her congratulations and remarked: “There are many important tasks ahead of us.”
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In a comment by DZ Bank it says: “The new appointment is a good choice. The graduate economist has the necessary monetary policy expertise and, as a native of the Bundesbank, stands for the regulatory tradition of this institution. “
Joachim Nagel knows the Bundesbank very well. There he was promoted to head of the central division and later to the board of directors for markets, accounting and organization. Now the 55-year-old is returning to his old place of work. As the successor to Jens Weidmann, he moves to the top of the venerable institution.
Next guardian of price stability?
The Bundesbank enjoys a reputation in Germany as the guardian of price stability. For more than ten years, the previous President Jens Weidmann defended this reputation and strengthened it – even if he was mostly in the minority with his positions on the Governing Council.
With Nagel, the new traffic light coalition has agreed on a classic compromise candidate as a successor, which primarily accommodates the SPD and FDP. The economist is a member of the SPD and between his economics studies in Karlsruhe and his doctorate worked as a consultant for the SPD party executive in Bonn. During his time as a board member of the Bundesbank, he commented critically on the ECB’s bond purchases – which should meet with approval from the FDP.
SPD would have liked to see a woman
According to Handelsblatt information, the SPD could for a long time imagine a woman at the head of the Bundesbank. The Bundesbank has never been run by a woman in its history. Among others, the Vice President of the Bundesbank, Claudia Buch, and above all Isabel Schnabel, who, as the director of the ECB, is a kind of supreme monetary policy ambassador of the central bank, came into question.
At the same time, one of Scholz’s closest confidants, his previous State Secretary and current economic advisor in the Chancellery, Jörg Kukies, is said to have expressed his interest in Schnabel’s position on the Executive Board of the ECB. At least that’s what people say in Frankfurt.
But this personal rogue did not materialize because there was resistance against the two women. Buch was considered too inconspicuous in political Berlin, and many did not yet trust her to make the next career leap. Against Schnabel there were great reservations in the FDP.
From the perspective of the Liberals, Schnabel supports the monetary policy stance of the ECB too uncritically. Many in the FDP fear that, as President of the Bundesbank, she would break with the previous course of the German central bank. Unlike Schnabel, Nagel is highly regarded in the FDP despite his SPD party membership.
Although a member of the SPD, Nagel ticke ticke ticke rather regulatory policy, it is said from the FDP. Nagel is also familiar with monetary policy. He also has a lot of international experience, but also knows the Bundesbank very well from his earlier time as a member of the board.
In addition, there should have been resistance to Schnabel’s change within the ECB and from other euro countries. After Jürgen Stark, Jörg Asmussen and Sabine Lautenschläger, Schnabel would have been the fourth German board member of the ECB to leave office prematurely within a decade. These offices are designed for six years. Some euro countries are said to have already raised the question of whether Germany should still have a permanent seat on the ECB’s board of directors in view of the many staff fluctuations.
Active in many committees
The question now is whether Nagel takes a similarly critical position as his predecessor Jens Weidmann on the monetary policy of the ECB or whether he sets other accents. Most recently, Nagel worked for the Bank for International Settlements (BIS), a kind of umbrella organization for central banks around the world. There he was Deputy Head of Banks. He also worked for KfW from 2016 to 2020, where he was responsible for international business on the Board of Management.
Nagel had a good reputation within the Bundesbank during his work there. Even then, he was active on many global bodies. The fact that he left the central bank anyway, observers attributed, among other things, to the fact that a second term in office was not certain for political reasons. The SPD had favored him in 2014 for the vacant Vice-Chief of the Bundesbank. At that time, however, the CDU only narrowly missed an absolute majority in the previous elections and was clearly in the upper hand over the SPD. The CDU decided in favor of Claudia Buch and against Nagel. Now the political majority has changed fundamentally, from which Nagel has benefited.
More: Bundesbank President Weidmann resigns