Bundesbank chief considered resigning in protest, reports say
Bundesbank president Jens Wiedmann has seriously considered resigning in protest several times over the past weeks, according to German paper Bild, as plans by Europe’s central bank to save the euro increasingly diverge from wishes in Germany.
ECB president Mario Draghi has said he will do “whatever it takes to save the euro”, including direct buying of short-dated debt of troubled nations.
Previously the ECB has limited its actions largely to supporting Eurozone banks, as German politicians said buying state debt directly is not acceptable.
But Draghi appears to want more direct action, including putting a cap on bond yields, by buying paper.
As he prepares to explain next week exactly what the ECB will do in this regard in autumn, the news his German-nation counterpart has considered stepping down will be a blow for still-fragile markets.
Wiedmann also sits on the EZB council, by virtue of being Bundesbank head.
Bild report he plans to oppose Draghi’s debt buying plans, although he holds only one vote on the council, despite Germany being the weightiest financier of previous Eurozone rescue mechanisms.
The paper said Wiedmann hoped to achieve more by not resigning, and bringing greater Euro stability and fighting for ECB independence instead. The government in Berlin has reportedly encouraged Wiedmann to stay put.
Germany is concerned in general that money printing needed for a bond buying program could fuel inflation, especially if the program had no ceiling of volume.
There are also worries that buying bonds and lowering yields on their debt could decrease pressure on troubled nations to enact required structural reforms.
The ECB already owns about €200bn of debt from the troubled countries, including 38% of all Greek sovereigns.