Joachim Nagel, a senior executive at the Bank for International Settlements, rose to pole position as head of Germany’s central bank in one of the first major appointments in the country’s new coalition government, according to a person with knowledge direct file.
Nagel, 55, who spent most of his career at the Bundesbank before joining the BIS as deputy head of the banking unit last year, has become the preferred candidate to succeed Jens Weidmann, who has announced last month that he would step down as president at the end of the year.
Other candidates for the post were Isabel Schnabel, a member of the ECB’s executive board, and JÃ¶rg Kukies, secretary of state at the finance ministry, but they are no longer in the running, people familiar with the talks said. However, a decision has not yet been finalized, they warned.
Little is known about Nagel’s views on monetary policy, as most of his 17-year career at the German central bank has been spent supervising capital markets.
Replacing Weidmann is one of the first big decisions for Olaf Scholz, who is set to replace Angela Merkel as chancellor next week after her Social Democratic Party won the parliamentary elections in September. Scholz formed a coalition with the Greens and the Liberal Party to govern.
The appointment comes at a tense time for the Bundesbank, where officials are increasingly worried about the surge in inflation in the euro area, which reached a record high of 4.9% last month, well beyond. above the European Central Bank’s 2% target.
A person familiar with the talks said Scholz leaned towards Nagel in part out of a desire to install a central banker rather than an academic at the head of the Bundesbank to maintain the institution’s stature and influence.
The Bundesbank has always been uncomfortable with the ECB buying large amounts of bonds, fearing this would fuel soaring inflation, encourage asset price bubbles and reduce discipline. budget by reducing borrowing costs for libertine governments.
Inflation has grown even faster in Germany, where it recently hit a three-decade high of 6%, causing growing political angst. “We shouldn’t be aiming for high inflation like we have today,” Scholz told Bild TV this week, adding that if it doesn’t go down as fast as expected, “we have to do something.”
Weidmann will leave shortly after the ECB’s Governing Council meeting on December 16 that will discuss plans to start scaling back its flagship response to the coronavirus crisis – the $ 1.85 billion pandemic emergency purchase program. euros.
Nagel, who studied economics at the Karlsruhe Institute of Technology, was a consultant for the Social Democratic Party in the 1990s before moving to the United States as a researcher, then joining the Bundesbank in 1999, where he was responsible for markets and later a member of the board of directors. responsible for international relations and IT.
After leaving the Bundesbank in 2016, he joined the board of directors of KfW, the German public development and investment bank. A little over a year ago, he joined the management team of BIS.
Although his background is more solid on the financial supervision and central bank markets side than on the monetary policy side, Nagel garnered support by speaking with the three political parties that agreed to form the next government, including including the Greens and the Liberal Democratic Party.
Schnabel’s appointment would have left Scholz with the difficult task of finding another woman to replace her at the ECB, while Kukies is now expected to play an important role in the Chancellor-elect’s squad.