Germany to propose Bundesbank deputy for ECB board seat

Tue Dec 17, 2013 9:13am EST
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By Annika Breidthardt and Andreas Rinke

BERLIN (Reuters) - Germany will propose Sabine Lautenschlaeger, a vice president at the German Bundesbank, to take the board seat at the European Central Bank that is being vacated by Joerg Asmussen, according to two sources familiar with the matter.

Asmussen announced on Sunday that he would be returning to Berlin after just two years on the ECB's six-member executive board, to become state secretary in the labor ministry.

His replacement will lead to some reshuffling of tasks on the board and comes at a time when the ECB is reaching the limits of its conventional monetary policy and may be forced to explore new ways to keep deflationary risks at bay.

Little is known about Lautenschlaeger's views on monetary policy, but she has a solid track record in banking supervision, having worked at German financial supervisor Bafin before joining the Bundesbank in 2011.

She has been among those who have warned about potential conflicts of interest when the ECB has responsibility for both monetary policy and banking supervision, and argued against treating government bonds as risk-free assets in bank books.

The prime candidate to become the Executive Board's representative at the new European banking watchdog, the Single Supervisory Mechanism, Lautenschlaeger is seen serving as its vice-chair. That would give her a strong role as the ECB can object the new body's proposed decisions.

Yves Mersch, Vitor Constancio and Peter Praet are also seen in the running for the job.

The most important and time-consuming part of Asmussen's job has been taking care of the central bank's international relations. Most likely candidates for that portfolio are Mersch and Benoit Coeure.   Continued...

Bundesbank Vice President Sabine Lautenschlaeger speaks during a news conference in Frankfurt November 14, 2012. REUTERS/Lisi Niesner