Courtesy of Benzinga.
Rumors that Jens Weidmann — head of Germany’s Bundesbank — would soon be resigning circulated the markets on Friday.
In recent weeks, Weidmann has stood as a stark opponent to the more dovish members of Europe’s elite, remaining the source of many headlines downplaying further easing actions by the European Central Bank.
Although Weidmann heads up the Bundesbank, (not the ECB), his influence pervades all of Europe’s monetary policy. If he stands in strong disagreement to the rest of Europe’s monetary policy figures, a resignation would not be unlikely. Last year, Jurgen Stark resigned from the ECB ahead of the implementation of the two Long-term refinancing operations (LTRO).
If Weidmann resigned, it might be a positive catalyst for the market as it could pave the way for further monetary policy actions on the part of the ECB. In fact, if Weidmann is really even thinking of resigning, it could be a sign that his side — the more hawkish side — is losing out.
Weidmann remains opposed to further bond purchases on the part of the ECB, comparing it to giving an addict more drugs. To be sure, bond purchases make it easier for indebted nations to continue financing themselves, as it serves to artificially suppress the interest paid on bonds and thus, makes it easier for the countries to borrow.
When rates on indebted nations like Spain and Italy have pulled back, equity markets in the U.S. and Europe have seen powerful rallies.
Later in the day Weidmann, when asked by Bloomberg, declined to comment.
