Sunday , July 21 2019

Weidmann hits French roadblock on path to replace ECB’s Draghi


Jens Weidmann may struggle to pass the test that France’s finance minister is setting for prospective successors to European Central Bank President Mario Draghi.
In a rare foray on the matter this week, Bruno Le Maire lavished praise on the Italian incumbent for quantitative easing, and suggested France would want someone with similar “courage” as a replacement. That may be bad news for the Bundesbank chief, who, as a critic of Draghi’s stimulus program, hardly represents the kind of continuity the minister seems to be looking for.
“Draghi’s term has changed deeply the approach to conducting monetary policy in the euro zone,” said Bruno Cavalier, economist at Oddo BHF. “The only candidate who would represent a break from that is Weidmann.”
Negotiations on the ECB succession will be conducted for France by President Emmanuel Macron rather than Le Maire. However, the minister’s comments underscore the difficulty Weidmann faces in convincing people that he could really change and do so credibly, despite the German’s hints at his openness to adapt to the responsibilities of a new office.
“I’m sure Le Maire was aiming at Weidmann,” said Dirk Schumacher, economist at Natixis. “It’s clear that Weidmann has an uphill battle to fight because he’s perceived, rightly or wrongly, as being too dogmatic.”
The succession is likely to remain unresolved until after the European elections in late May, when it will be addressed as part of a carve-up of key European Union positions including the presidency of the Commission. Draghi leaves office at the start of November.
Le Maire’s intervention, in response to questions in parliament, is the most outspoken expression yet of the evolving view of the French administrative class on impending personnel shake-up. Macron hasn’t yet shared his views publicly.
“The economic situation of the euro zone wouldn’t be the same if there would have been somebody else, different from Mario Draghi, who would have had less courage and less lucidity,” Le Maire said. “The men and women who fill these posts is indeed a completely essential matter.

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