It didn't take long for German Chancellor Angela Merkel to react. Just two days after media reports that German Central Bank head Axel Weber was withdrawing his name from consideration for the soon-to-be open position of European Central Bank president caught her by surprise, Merkel ordered him to the Chancellery in Berlin. At the conclusion of the meeting, Merkel's spokesman announced that Weber was stepping down from his Bundesbank position.
According to a statement from Merkel's spokesman Steffen Seibert, Weber's resignation is effective on April 30, a full year before his term was set to end. The government made no indication as to who might step in to fill the vacancy but said an announcement would follow next week.
Speculation about Weber's future had swirled since Wednesday, when several media reports indicated that the fiscal conservative planned to withdraw his name from contention for the ECB position. Some outlets reported that Weber, who has led the Bundesbank since 2004, planned to take a position with Deutsche Bank. Weber himself has so far declined to comment on the reports, saying only that wanted to discuss the situation with Merkel first.
Weber had been considered the leading candidate in the race for the ECB presidency and Merkel had seemed determined to install him in the position despite opposition from other European countries, most notably France. Many in Europe had begun to question Weber as a result of his vocal opposition to the ECB's purchase of government bonds from highly indebted euro-zone countries in an effort to help them stave off bankruptcy. He was also opposed to aid packages for Greece and other struggling members of the common currency union.
Who's Next at the ECB?
The uncertainty about Weber's future has widely been interpreted as a blow to Merkel. Last year, she backed Vitor Constancio of Portugal for the position of ECB vice president to help clear the path for Weber. Having a southern European in the position of vice president would mean, according to EU conventions regarding geographical representation, that the position of president would likely be filled by a northern European.
Still, her relationship with Weber was fraught, and this week's reports of his uncertain future caught the chancellor by surprise. Many German commentators have written that her sudden lack of an ECB candidate may harm efforts to push through her plan for tighter economic coordination among euro-zone states. Furthermore, Weber had been seen as an ideal choice to push for the kind of fiscal discipline in the euro zone that Germany has been calling for.
It is unclear whether Merkel will put forward another German candidate for the ECB position and her spokesman declined comment on Friday.
The search for a new ECB president is now more wide open than ever. With current President Jean-Claude Trichet's term ending in October, the European Union plans to begin negotiations in earnest in March. Many see Italian Central Bank head Mario Draghi as the new frontrunner, though it is unclear whether Berlin will throw its support behind the candidate. Others in the running are Finnish Central Bank Governor Erkki Liikanen as well as his Luxembourgian counterpart Yves Mersch.
German Economics Minister Rainer Brüderle said he regrets Weber's decision. The Bundesbank head, he said, had "stood solidly behind the principals of the market economy" and the "independence of the Bundesbank." His policies, Brüderle said, had "stabilized faith ... in inflation-free growth."