(Bloomberg) -- Bundesbank chief Jens Weidmann sought to achieve a game changer in his candidacy for the European Central Bank presidency with an acknowledgment that the institution’s crisis-fighting tool is legal and valid.
The German economist’s vocal opposition to ECB President Mario Draghi’s defining policy to do “whatever it takes” to defend the euro has proven a sticking point in his bid to succeed the Italian. He even testified against the measure, known as Outright Monetary Transactions, in court.
Now he has told German newspaper Die Zeit that the policy, which allows the ECB to buy an unlimited amount of nation’s bonds in return for economic reforms, is legally sanctioned.
“The European Court of Justice has examined OMT and determined it to be legal,” Weidmann said. “Moreover, OMT is current policy."
Weidmann may become German Chancellor Angela Merkel’s chief candidate for a top European Union job if her other option of Manfred Weber, her party ally who is vying for the Commission presidency, falls flat. The Bundesbanker’s previous criticism of OMT and opposition to the deployment of quantitative easing has not endeared him with southern European countries.
Weidmann said his testimony against OMT at Germany’s constitutional court was motivated by his worries on monetary policy.
“It was driven by the concern that monetary policy could get caught in the wake of fiscal policy,” he said. “Of course, a central bank must act decisively in the worst-case scenario, but given its independence, there should be no doubt that it is acting within the framework of its mandate."
The interview is “helpful, but it’s not decisive,” said Ricardo Garcia, chief euro-zone economist at UBS. “Weidmann has the challenge that he’s seen rather skeptically by southern European countries because he’s considered a hawk within the Governing Council.”
Weidmann’s rivals for the ECB presidency include Bank of France Governor Francois Villeroy de Galhau, ECB Executive Board member Benoit Coeure, Bank of Finland Governor Olli Rehn, and Rehn’s predecessor Erkki Liikanen.
EU leaders are due to meet this week to discuss senior EU jobs coming due this year. The presidencies of the EU Commission, the ECB and the EU Council are all up for grabs.
“It it feels very much like repositioning ahead of the game of musical chairs that’s about to commence with regard to the succession of Draghi,” said Peter Dixon, an economist at Commerzbank (DE:CBKG) in London. “It’s an overtly political move.”