Weidmann's successor, Nagel: Banks have high hopes for new Bundesbank presidents

After the agreement of the Ampel coalition on Joachim Nagel as the new Bundesbank president, banks and associations immediately pointed out the major tasks that the newcomer will face.

Above all, concerns about rising inflation rates and the exit from the ultra-loose monetary policy are likely to be on Nagel's agenda.

Basically, however, bank representatives and economists see Nagel as the right man in terms of initial reactions.

The inflation has returned with power in the euro area, said Helmut Schleweis, President of the German Savings Banks and Giro Association.

“The new Bundesbank President must tackle this challenge with all determination.

It is important to work together with the central banks in the Eurosystem to prepare for the exit from ultra-expansionary monetary policy.

In the future, this should also include the exit from negative interest rates. " 

Germany as "anchor of stability in Europe"

Deutsche Bank boss Christian Sewing praised Nagel in his role as President of the Association of German Banks. "This brings an expert with many years of experience with central banks and excellent knowledge of the financial markets to the top of the German central bank." The appointment of Nagels fits with Germany's role as an "anchor of stability in Europe" as set out by the federal government in the coalition agreement.

Former Bundesbank board member Joachim Nagel is to replace Jens Weidmann at the head of the German central bank.

Finance Minister Christian Lindner (FDP) tweeted on Monday that he and Chancellor Olaf Scholz were proposing Nagel as the new President of the Bundesbank.

In view of inflation risks, the importance of a stability-oriented monetary policy is growing, wrote Lindner.

Nagel is "an experienced personality who ensures the continuity of the Bundesbank".

"A clear monetary policy compass is more important than ever"

Various economists also pointed to this importance. Marcel Fratzscher, President of DIW, who himself was at times considered to be a candidate for Weidmann's successor, said: "Joachim Nagel is a very good economist and a bright head, who will represent Germany excellently and will contribute his voice to the ECB." Above all his work on the role of financial markets and financial stability will continue to gain in importance in the future.

Jan Holthusen, chief economist at the top cooperative institute DZ Bank, said the new appointment was a good choice.

As a native of the Bundesbank, Nagel stands for the regulatory tradition of this institution.

He has good qualifications to help shape the monetary policy of the ECB in the coming years in a constructive and critical manner.

"In an environment in which the ECB is constantly devoting itself to new tasks, central bankers with a clear monetary policy compass are more important than ever." 

Massive inflation risks

Jörg Krämer, Commerzbank's chief economist, pointed out that there were massive inflation risks in the euro area. In this respect, a stability policy orientation is more important than yes. "But Joachim Nagel, like Jens Weidmann, will meet an ECB council whose majority

leans towards

a loose

monetary policy." The Bundesbank president is involved in the decisions of the central bank's highest decision-making body, but like the representatives of the other 18 euro countries, he only has one Vote - even if Germany is Europe's largest economy. This lack of enforcement possibilities in the ECB is one of the reasons why Weidmann wants to give up his office at the end of the year. 

Nagel is a member of the SPD and already sat on the board of directors of the Bundesbank from 2010 to 2016, then went to the KfW development bank and currently works at the Bank for International Settlements (BIS), which is also known as the central bank of the central banks.

The 55-year-old studied economics in his native city of Karlsruhe and did his doctorate at the university there.

During his time at the Bundesbank, he often positioned himself in a similar way to Weidmann on monetary policy issues, so that his appointment shouldn't mean a major change in the central bank's attitude.

During his time at KfW, he took care of development cooperation and the international business of the state development bank.