Germany wants deputy finance minister to join ECB

September 10, 2011 - 10:30 AM
Germany European Central Bank

FILE - In this Oct. 19, 2010 file picture, then French Finance Minister Christine Lagarde, right, speaks with German Deputy Finance Minister Joerg Asmussen during a round table meeting of EU finance ministers at the Kiem Center in Luxembourg. Germany's finance minister said Saturday Sept. 10, 2011 he wants his long-serving deputy to succeed Juergen Stark on the executive board of the European Central Bank. Wolfgang Schaeuble said he told the head of the Eurogroup that he wanted Joerg Asmussen to succeed Stark. He added that he expects Asmussen to join the ECB by the end of the year. Asmussen, a member of the opposition Socialist party, has been a key official in the eurozone's fight against the debt crisis. Stark unexpectedly resigned from the ECB's executive board Friday in a move that analysts say was triggered by disagreement over the bank's bond purchases. Asmussen's appointment still needs to be signed off by all other eurozone finance ministers. (AP Photo/Virginia Mayo,File)

MARSEILLE, France (AP) — Germany's finance minister said Saturday he wants his deputy to take on a key position at the European Central Bank and will make proposals for the governance of the eurozone next week.

The two announcements, made on the sidelines of a meeting of the Group of Seven developed nations in Marseille, France, could have a lasting impact on the way the eurozone handles its crippling debt crisis.

If he gets approval from the other 16 eurozone finance chiefs, Joerg Asmussen will succeed Juergen Stark on the ECB's six-member executive board at the end of the year, German Finance Minister Wolfgang Schaeuble said.

Stark unexpectedly resigned from the board Friday in a move analysts said was triggered by disagreements over the ECB's bond buying program. The announcement of his departure sent stocks and the euro tumbling as it drew up more questions over the eurozone's crisis strategy.

Stark was one of only a handful of ECB decision makers who opposed the bank's massive purchases of Italian and Spanish government bonds in recent weeks.

Supporters of the purchases argue that they help support struggling governments during unwarranted market selloffs and buy time for the currency union to find a more lasting solution to its debt troubles. But opponents like Stark have warned that they saddle the bank with risky investments that could hurt its independence and stability if one of the aided governments defaults.

Asmussen, who sat side-by-side with Schaeuble at the news conference, declined to comment on whether he supports or opposes the ECB's bond purchases.

Unlike Schaeuble, Asmussen is a member of the opposition Social Democrats and survived the handover of the finance ministry in 2009 to the conservatives because of its experience in European and financial policy. He had joined the ministry in 1996 and quickly rose through the ranks. Generally, the Social Democrats support loser monetary policy and more help for the eurozone's weaker members.

However, like the current Bundesbank President Jens Weidmann, Asmussen studied under former Bundesbank President Axel Weber — both forceful opponents of the bond buying program.

At the same news conference, Schaeuble also said that he plans to make new proposals on the future governance of the eurozone at a meeting with his counterparts next week.

He said he will make the proposals together with French Finance Minister Francois Baroin at a meeting with their counterparts next week in Wroclaw, Poland.

The governance of the eurozone, especially when it comes to fiscal and economic issues, has moved into the center of debate during the debt crisis, which has pushed Greece, Ireland and Portugal into needing hundreds of billions of euros in rescue loans and created concerns over the finances of Spain and Italy.

Schaeuble did not give details on his plans. However, last month, German Chancellor Angela Merkel and French President Nicolas Sarkozy called for a "new economic government" for Europe.

Under that new regime, eurozone leaders would meet at least twice a year under European Union President Herman Van Rompuy. Merkel and Sarkozy also called for all eurozone nations to enact constitutional amendments requiring balanced budgets.