Axel Weber will step down as head of the Bundesbank a year before his term ends, the German government said today, formally ending his chances of becoming the next president of the European Central Bank.
Reports earlier this week said Weber planned to remove himself from consideration for the top ECB post held by Frenchman Jean-Claude Trichet and leave the Bundesbank early, but today’s statement was the first official confirmation.
‘Bundesbank president Axel Weber told German Chancellor Angela Merkel that he would like to step down on April 30 2011 at the end of his seventh year in office,’ a government spokesman said. The Bundesbank confirmed his departure.
The 53-year old Weber, an inflation-fighting monetary ‘hawk’ who left a meeting with Merkel earlier today without speaking to reporters, was widely seen as the front-runner to replace Trichet when his term ends in October.
His withdrawal has thrown the ECB race wide open and fed unease in financial markets about the ability of divided European policymakers to solve the euro zone's sovereign debt crisis.
The ECB has played a crucial role in responding to the crisis, buying the bonds of strugggling euro zone countries as part of a concerted push to calm markets. Weber's public criticism of that decision may have cost him the top job.
The Frankfurt-based central bank stepped into the markets for the first time in two weeks on Thursday to buy Portuguese bonds, traders said, after yields hit euro-era highs on concerns about perceived slow progress on solving the year-long debt crisis.
Earlier, German finance minister Wolfgang suggested that Germany could accept a non-German in the prestigious ECB post, but told reporters that the priority was agreeing a ‘comprehensive package’ to help stem the bloc's debt crisis.
Italian economy minister Giulio Tremonti said Europe should find the most competent person for the job independent of their nationality, but also described his countryman Mario Draghi, the Bank of Italy governor, as an ‘excellent’ candidate.
Weber's withdrawal is a blow to Merkel's drive to secure the ECB post for a German and could raise pressure on her to impose tough German-style fiscal rules on euro zone partners to satisfy voters in a year of seven state elections.
The news comes ahead of two crucial summits - on March 11 and March 24-25 - at which European leaders want to agree a comprehensive package to resolve the debt crisis. Germany and France want their ‘competitiveness pact’ to be part of the broader package, in return for agreeing to strengthen a €440 billion bail-out fund.
