His strident opposition to measures that he says would undermine the value of the euro may constrain the freedom of the ECB, the one European institution that can quickly mount massive efforts to prevent the breakup of the euro zone. Already, Weidmann’s dissent seems to have prompted the ECB to adopt such stringent conditions on its aid that Spain and Italy are hesitating to ask for it.
And while his one-time boss German Chancellor Angela Merkel has been easing her demands that neighboring countries adopt tough austerity measures in return for help, the Bundesbank chief is making conciliation more difficult for her.
At the same time, his efforts could be limiting Merkel’s leeway because of domestic German politics. Merkel, who is up for reelection next year, already faces a public that is increasingly skeptical of the euro zone.
“Those who are attempting to marginalize the Bundesbank are playing with fire,” said Juergen Stark, former chief economist of the ECB who resigned his post last year to protest what he said was a previous example of the central bank overstepping its mandate. At stake, he said, are “the acceptance of the euro and European integration.”
In Germany, Weidmann’s domestic influence is rising as he strikes out against plans to reduce troubled countries’ borrowing costs by buying up as many bonds as are needed to meet the ECB’s idea of sustainable levels. Many Germans fear that printing the money to buy the bonds will contribute to higher inflation in the long run — a violation of what they see as the ECB’s principal mandate and a bitter tonic for a country that gave up its cherished mark in exchange for assurances that the euro would be just as stable.
The new measures are the closest the euro zone has come to offering a guarantee that governments will not go bankrupt — and Weidmann was the only one of the ECB governing council’s 23 members to vote against the plans.
The buttoned-up Weidmann — a slim, 44-year-old strawberry blond who has spent his career climbing the rungs of Germany’s economic establishment — is an unlikely rabble-rouser. Merkel appointed him in 2011 as the youngest-ever head of the Bundesbank after he had served five years as her top economic adviser. Some expected that he would adopt a conciliatory role toward the government whose policies he had just been shaping.
As Merkel — whom some call the Iron Frau — has eased her insistence that struggling euro-zone governments adopt painful austerity measures, Weidmann has taken center stage as the voice of steely-cold German resistance. With the Bundesbank one of the major symbols of Germany’s post-World War II recovery, he is highly influential in shaping the opinions of ordinary citizens, including many who work for or own the small and medium-sized manufacturing companies that are particularly vulnerable to inflation. Merkel has said she approves of the ECB’s plans. But to many Germans, the Bundesbank’s views carry more weight. Weidmann is the highest-paid public official in Germany — including Merkel.