Germany’s Bundesbank has announced the death of its former
president Hans Tietmeyer, who headed the central bank in the run up to the
launch of the euro.

Tietmeyer joined the Bundesbank at the start of 1990 after
working in government – part of which saw him conduct negotiations on international monetary
issues and global financial relations – died on December 27.

From 1985
to1987 he chaired the European Commission Monetary Committee and after joining
the Bundesbank his first responsibility as a member of the Bank’s Directorate
(now the Executive Board) was for international affairs and global monetary
issues as well as organisational matters and agreements.

Between
April and June 1990, he acted as German Chancellor Helmut Kohl’s personal
representative in negotiating the terms of German monetary union which was to
come into force on 1 July of that year.

In the
summer of 1991, he was appointed vice-president of the Bundesbank and in
October 1993 he became president.

Tietmeyer
was a fierce proponent of “stable money” and regularly defended the
Bundesbank’s policy of keeping the money supply scarce and to fend off attacks
on its independence from politicians, the business community or social
commentators. This was illustrated by his criticism of Chancellor Kohl’s
government for running up heavy debts to finance the costs of German
reunification.

On another
occasion, he famously clashed with Germany’s then-finance minister Theo Waigel
when the latter called for the Bundesbank’s gold and foreign currency reserves
to be revalued to help reduce Germany’s budget deficit and help it achieve the
Maastricht criteria. Tietmeyer refused to revalue the reserves and thus channel
higher Bundesbank profits to the Federal budget.

He also
roundly rejected complaints voiced by then-finance minister Oskar Lafontaine
in 1998 that the Bundesbank’s mandate should not consist solely in
safeguarding monetary stability.

The
Bundesbank says that Tietmeyer supported the idea of European Monetary Union
(EMU) ever since he sat on the Werner Group, a body which was already working
on proposals to that end back in 1970. That said he was also outspoken on
how EMU should be achieved, so much so that newspapers in Germany and abroad
dubbed him “the last guardian of the D-Mark” when he retired as president
in 1999.

Tietmeyer
was a loud critic when the rules for entry to EMU were eased, and was a
proponent of monetary convergence before monetary union – even if the latter
were delayed.
“Nobody in Europe should harbour any interest in building
monetary union on a shaky foundation,” he said in a speech ion November 1994. “As
such, it is of greater importance to strictly comply with the convergence
criteria than to keep to the agreed schedule.”

In 1998, shortly before stepping down, Teitmeyer maintained
the attack, stating, “A stable euro may indeed greatly improve the prospects
for growth and employment in internal relationships as a result of the
elimination of exchange rate risks, but this requires appropriate political
action at the national level to pave the way. Monetary policy cannot take on
the responsibilities of other policy areas – be they fiscal, social or
wage-related.”

Even post-retirement Tietmeyer continued, in a 2004 book he
criticised how European governments had broken the spending limits he imposed –
and he was of course vindicated in 2010 with the advent of the Greek crisis.

“Hans
Tietmeyer was an outstanding president, whose actions always followed clear and
consistent lines aimed at maintaining monetary stability,” says current  Bundesbank President Jens Weidmann. “Our
thoughts and best wishes go out to his family and loved ones.”

Mario
Draghi, president of the European Central Bank, adds, “Hans Tietmeyer was a
founding father of the Maastricht Treaty. He was an outstanding central banker
who had the rare opportunity to shape, at two stages in his career, the
introduction of a new currency: the Deutsche mark in the eastern part of
Germany and later the euro. He was a member of the first Governing Council of
the European Central Bank until his retirement and remained strongly attached
to the ECB by serving on its Audit Committee. 

“Hans
Tietmeyer made price stability the cornerstone of our mandate,” Draghi adds. “He
defended the independence of the ECB and emphasised that Members of the
Governing Council act in a personal capacity, not as representatives of their
national central banks, and should pursue price stability for the euro area as
a whole. In so doing, he made the ECB a truly European institution. We will
miss a true European.”

Colin_lambert@profit-loss.com

Twitter
@lamboPnL

Twitter
@Profit_and_Loss

Colin Lambert

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