axel weber

Ralph Atkins

Has Axel Weber, head of Germany’s Bundesbank, just blown his chances of becoming European Central Bank president next year? In an interview with the country’s Börsen Zeitung newspaper, to be published on Tuesday, he warns of the risks to monetary stability involved in buying government bonds and says he saw this part of the ECB’s actions “critically”.

His opposition is not surprising. What is, is Mr Weber’s decision to make his view public. Open dissent is viewed dimly within the ECB – and the Bundesbank president’s comments risk undermining the effectiveness of yesterday’s package. 

Simone Baribeau

Axel Weber, Bundesbank president, today called for a ‘resolution regime’ for failing financial institutions and a strengthening of banks’ capital requirements, but criticised proposals that would ban risky activities outright.

Taking aim at the proposed “Volcker rule” which would prohibit proprietary trading in deposit-taking institutions, Mr Weber said it could lead to greater instability in institutions that were not covered by the rule, such as hedge funds or investment banks. But the more serious problem, said Mr Weber, is that banning activities “that are perhaps more risky but not necessarily economically inefficient” is a “very far reaching economic intervention.” 

Ralph Atkins

An old debate at the European Central Bank has just been reignited by Axel Weber, Bundesbank president. Speaking at a media prize ceremony in Hamburg he has repeated his concern about the use of “code words” to signal likely future interest rate movements.

This was a big issue when the ECB was raising borrowing costs between the end of 2005 and July 2008. A warning by Jean-Claude Trichet, president, that the governing council was exercising “strong vigilance” was as near as you could get to confirmation that interest rates would rise a month later.

Mr Weber argued in Hamburg that such tactics allowed the ECB to manage expectations without committing itself. The danger was that financial markets became too focused on listening for code words, rather than analysing properly the economic situation. 

Ralph Atkins

Ralph Atkins, of the Financial Times, wonders if Axel Weber is turning more hawkish 

Ralph Atkins

Weber is engaged at power struggles at the Bundesbank, writes the Financial Times’ Ralph Atkins