With E.C.B. in Spotlight, Bundesbank Finds Itself in the Shadows

Built 45 years ago, the modernist building is hardly old by European standards, yet it is a temple to tradition, embodying the ethos of this most conservative of institutions. “We are trying to keep it just the way it is,” said Reiner Bruckhaus, head of the bank’s centralized construction management division.

That starts with the granite floors, the Barcelona chairs in the lobby (designed by the Bauhaus great Ludwig Mies van der Rohe), and the grand, white Carrara marble by the elevators, and goes all the way up to the wood grid ceilings on the top floor. “You will find not even the slightest changes,” Mr. Bruckhaus said.

When the building was erected in 1967, the Bundesbank’s dominance in European monetary policy went unchallenged. But in the hazy distance of the Frankfurt skyline, significant change is evident in the outline of two towers and three cranes, the new headquarters of the European Central Bank — a visible reminder of the institution that has supplanted the Bundesbank, just as the euro replaced the German mark.

European leaders established the European Central Bank’s headquarters in Frankfurt as a symbol of its status as heir to the Bundesbank. But the danger posed by Europe’s continuing debt crisis demanded improvisations at odds with the Bundesbank’s conservative teachings.

Over the summer the E.C.B.’s president, Mario Draghi, pursued an expansive policy that was anathema to the old guard, whose cause was championed by the Bundesbank’s youthful president, Jens Weidmann. He and his supporters base their views not, they say, on rigid orthodoxy but on experience gleaned from the disaster of hyperinflation and the success of adhering to a hard-money path.

In an increasingly uncomfortable pairing, the Bundesbank functions as the largest piece of the E.C.B. puzzle. With more than 9,500 full-time workers, the Bundesbank dwarfs the 1,600-strong central bank. Because of that limited staff, the E.C.B. depends on the Bundesbank to handle many of the back-office functions of the common currency.

But the European Central Bank’s influence continues to grow. Euro-zone finance ministers agreed to a deal Thursday to put 100 to 200 of their largest banks under its direct supervision.

The arranged marriage between the two banks will take enormous effort and flexibility. As its massive headquarters suggests, the Bundesbank is capable of enormous and sustained effort, but flexibility may be inimical to its nature.

Founded in 1957, the Bundesbank quickly grew into one of Germany’s most respected institutions. The rank-and-file behind Mr. Weidmann, 44, represent an unusually tight-knit group, almost like a monastic order, and they are steeped in the bank’s secular religion — often at the bank’s own school, a kind of Hogwarts for its future financial wizards, in a hilltop 12th-century castle in the town of Hachenburg.

“You hear it in the first lecture,” said Silke Frühklug, 32, a graduate and Bundesbank employee. “You hear it in the last lecture and every day in between: price stability.”

Ms. Frühklug married a classmate and in her free time plays on the central bank’s badminton team, which on a recent evening practiced in a gymnasium on the Bundesbank campus right after the handball team. The bank also has a theater society and “hobby artists” club, which exhibits in the lobby of the headquarters. It owns apartments for workers in tight real-estate markets like Munich and here in Frankfurt. Retired employees still lunch at the cafeteria, helping to nurture the all-important continuity.

“People feel connected with the goals of the bank,” said Matthias Endres, 43, editor of the Bundesbank’s internal magazine. Like Ms. Frühklug, he married a fellow graduate from the school in Hachenburg. He has vacationed with his wife and their three children at all three of the Bundesbank getaways, on the North Sea, in the Black Forest and on a lake in Bavaria.

Mr. Endres’s wife, Simone, works part-time in the headquarters’ Money Museum, which houses some 350,000 objects, of which roughly 1,300 are on display, including the worthless bills in denominations of millions and billions from the hyperinflation of the Weimar-era and examples of commodity money, like a gold bar, a tea brick and even a preserved cow standing near the entrance, a silent bovine greeter.

Jack Ewing contributed reporting.

Article source: http://www.nytimes.com/2012/12/15/world/europe/with-ecb-in-spotlight-bundesbank-finds-itself-in-the-shadows.html?partner=rss&emc=rss