Advisor to Chancellor Angela Merkel,2006–2011
In 2006,Weidmann began working at the Federal Chancellery,where he was responsible for preparing the content and strategy of the G-20 round which was formed to counter the effects of the financial crisis. When he started,he was the youngest department head in the German government. [4] Chancellor Angela Merkel promoted him in December 2009 to the influential role of the Sherpa of the G8 summits [5] as she considers the G8 round to be only a pre-summit of the G20 round in the field of the world-wide financial system as well as that most other subjects need a wider context than the G8 as well (compare Heiligendamm Process for G8+5).
During his time at the Federal Chancellery,Weidmann was involved in a series of major decisions in response to the financial crisis in Germany and Europe:preventing the meltdown of the bank Hypo Real Estate,guaranteeing German deposits and implementing a rescue programme for the banking system,piecing together two fiscal-stimulus programmes,and setting up the Greek bail-out package and the European Financial Stability Facility (EFSF). [3]
In 2011,Weidmann suggested to Merkel that the position of Bundesbank vice president,which had also become vacant,be filled by Sabine Lautenschläger,then director of Germany's Federal Financial Supervisory Authority (BaFin). [4]
President of the Bundesbank,2011–2021
In February,2011,Weidmann was designated to succeed Axel A. Weber as president of the Deutsche Bundesbank. [6] [7] [8] In September,with the ongoing European sovereign debt crisis,Weidmann was observed by a British commentator,David Marsh,to be taking a "cool" course relative to Chancellor Merkel. Marsh wrote that Weidmann was saying the European Monetary Union (EMU) "has to go in one of two directions. Either it takes the path of a fiscal union in which member countries fuse together their economic and financial systems into a much more robust framework that will protect them from internal dislocation. Weidmann says,coolly,this is somewhat unlikely. Or EMU remains a looser grouping of countries that will face the discipline of the financial markets if they fail to produce economic convergence," namely exit from the EMU and default,looking particularly at Greece. Marsh also noted that Merkel is committed to the first course and so may come into conflict with her one-time economic adviser Weidmann. [9]
In a late November,2011,speech in Berlin,Weidmann criticized the errors and "many years of wrong developments" of the EMU's peripheral states,particularly the wasted opportunity represented by their "disproportionate investment in private homebuilding,high government spending or private consumption",David Marsh reported. [10] In early December,with another in a string of Eurozone summits imminent,Bloomberg commented that the new ECB head Mario Draghi "knows he can't afford to repeat" his predecessor Jean-Claude Trichet's mistake of alienating the Bundesbank. Draghi was said in the report to be courting Weidmann by,among others,Julian Callow,chief European economist at Barclays in London. [11]
In May,2012,Weidmann's stance was characterized by US economist and columnist Paul Krugman as amounting to wanting to destroy the Euro. [12]
Weidmann,in late August 2012,was reported to have threatened to resign as Draghi's July 2012 promise to do "whatever it takes" to save the Euro seemed likely to lead to purchases of Italian and Spanish bonds to keep interest rates in those major member economies capped at manageable levels. "In an interview with Der Spiegel last week,Weidmann said the bond buying made it look as if ECB was financing governments directly —and shouldn't go ahead",reported another MarketWatch commentator,Matthew Lynn. Lynn further speculated on the Draghi-Weidmann interaction,reminding readers of Axel Weber's 2011 resignation over a "similar [ECB] scheme" and also of the 1992 failure of the European Exchange Rate Mechanism over German refusal to choose "printing money (taking some small risks with inflation) ... to stabilize the system". [13]
On 24 February 2016,as part of the Bundesbank's annual news conference,Weidmann notably dismissed deflation in light of the ECB's current stimulus program,pointing out the healthy condition of the German economy and that the euro area is not that bad off,on the eve of the 9–10 March 2016 meetings. [14]
In April 2019,Weidmann's mandate as Bundesbank president was renewed for another eight years. [15] On 31 December 2021,he stepped down,concluding his ten-year tenure five years early. [16]
