Nearly three weeks after the first rumors about his impending appointment to lead Germany’s Bundesbank landed, Joachim Nagel has reportedly been confirmed to lead the Germany central bank, a position of critical importance when it comes to setting the course for the EU’s shared monetary policy.
The news comes courtesy of German newspaper Handelsblatt and a tweet from newly installed German Finance Minister Christian Lindner, who announced the decision Monday morning in a tweet. Previously, the FT had publicized rumors sourced to high-ranking members within Germany’s new government that the former executive at the Bank for International Settlements would step into the position, long held by the conservative-leaning Jens Weidmann, who led the Bundesbank during Angela Merkel’s 16-year reign.
Lindner added that both he and Chancellor Olaf Scholz believe Nagel is best suited to keep rising inflationary pressures in check with a monetary policy oriented toward “stability”.
Bundeskanzler @OlafScholz und ich schlagen Joachim Nagel als neuen Präsidenten der @bundesbank vor.Angesichts von Inflationsrisiken wächst die Bedeutung einer stabilitätsorientierten Geldpolitik. Er ist eine erfahrene Persönlichkeit,die die Kontinuität der #Bundesbank sichert. CL
— Christian Lindner (@c_lindner) December 20, 2021
Before joining the BIS, Nagel worked in the nineties for a time as a consultant for economic and financial policy at the SPD party executive in Bonn. After positions at the Landeszentralbank in Hanover, the Bundesbank and the KfW banking group, he joined the BIS.
Weidmann’s tenure at the helm of the Bundesbank is expected to end wit the year.
With all this talk of stability, the big question on everyone’s minds right now is exactly how conservative will Nagel be once he’s installed not just atop the Bundesbank, but also as a member of the ECB’s governing council. During his ten years in office, Weidmann earned a reputation as a “hawk” on the ECB’s Governing Council, pushing for tighter monetary policy and fighting tirelessly to defend the Bundesbank’s point of view, which has gone out of fashion in the post-crisis NIRP world.
Many would like to know whether Nagel will continue with his predecessor’s course, or whether a change of direction is to be expected.