FRANKFURT — Germany moved swiftly to install a guardian of its interests in the European Central Bank Saturday, nominating a top technocrat to replace a senior bank official whose unexpected resignation Friday hinted at divisions over the conduct of monetary policy.
The selection of Jörg Asmussen, 44, a deputy finance minister and career bureaucrat, announced at the meeting of Group of 7 countries in Marseille, France, appeared designed to reassure a German public increasingly concerned about the extraordinary lengths that the central bank has gone to support ailing countries like Greece and Spain.
Internal divisions at the European Central Bank spilled into the open Friday after Jürgen Stark, the bank’s de facto chief economist, said he would resign his seat on the six-member executive board, which manages bank operations and plays a leading role in setting monetary policy.
In a measure of the acute doubts about Europe’s ability to contain the sovereign debt crisis, Mr. Stark’s resignation was enough to spark stock declines in Europe and the United States. Mr. Stark’s resignation also threatened to further strain European unity and undermine German support for measures to keep Greece from defaulting.
Mr. Stark is an opponent of the E.C.B.’s purchases of bonds from ailing countries to hold down their borrowing costs, and many Germans share his concerns. His resignation “makes the European bailout scheme more unpopular among German voters which lowers the long-term credibility of the bailout policy among investors,” Jörg Krämer, chief economist at Commerzbank, said in a research note Saturday.
Mr. Asmussen’s background suggests he will carry on the German economics tradition, with its focus on price stability. Mr. Asmussen studied economics at the University of Bonn, where he was a protégé of Axel Weber, who later became president of the Bundesbank before resigning earlier this year — like Mr. Stark, in protest over the E.C.B.’s intervention in bond markets.
Mr. Asmussen is close to Jens Weidmann, who succeeded Mr. Weber as president of the Bundesbank. Mr. Weidmann also studied under Mr. Weber, and is known to be among the minority on the E.C.B.’s policy-making governing council who oppose what critics regard as the bank’s improper interference in government fiscal policy.
Mr. Asmussen and Mr. Weidmann are likely to form a united front on the central bank’s governing council. But, along with two or three other council members who opposed the bond purchases, Mr. Asmussen will represent a minority view.
Mr. Asmussen’s appointment must be ratified by other European leaders, but is a foregone conclusion.
Jack Ewing reported from Frankfurt, and Liz Alderman from Marseille.
Article source: http://feeds.nytimes.com/click.phdo?i=7f9c5db9594f3b2068a03b816280db56
Speak Your Mind
You must be logged in to post a comment.