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Axel Weber, the Bundesbank president, and the European Central Bank

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Axel Weber, the Bundesbank president, has put himself on a collision course with European Central Bank policymakers by arguing publicly in favour of extending emergency help for eurozone banks until at least next year.

The comments by Germany’s central bank head were unusually forthright and suggested he wanted to assert his authority ahead of a decision next year on a successor to Jean-Claude Trichet as ECB president.

Mr Weber told Bloomberg Television in an interview broadcast on Friday that the ECB should continue providing unlimited liquidity on a weekly, monthly and three-monthly basis until at least the start of 2011. Discussion on the ECB’s “exit strategy” would be “focused on the first quarter” he said.

Other members of the ECB’s 22-strong governing council are likely to agree with Mr Weber’s cautious approach, which on Friday drove the euro lower. But he will have created annoyance by pre-empting discussions at the council’s next meeting on September 2.

His comments “might perhaps be an irritation for ... Trichet, who always stresses his prerogative as ECB president to be the ‘porte-parole’ of the council,” said Julian Callow, at Barclays Capital.

Erik Nielsen, an economist at Goldman Sachs, said: “Trichet hates this because he is the communicator on the council.”

Mr Weber is a possible candidate to succeed Mr Trichet, whose non-renewable eight-year term expires in October 2011. It is not the first time his public statements have created waves. In May, at the height of the eurozone crisis, Mr Weber opposed the ECB’s emergency government bond purchasing programme – and in Friday’s interview dismissed it as having “played a minor role only”.

Diplomatic skills were not essential for an ECB president, said Mr Weber. “It’s important to be a diplomat for the diplomatic corps. It’s not so important for a central bank.

“One of the central bankers I’ve always admired was Paul Volcker [former US Federal Reserve board chairman],” he added. “You can call him anything, but not a diplomat.”

The Bundesbank president refused to comment on whether he might succeed Mr Trichet.

After the collapse of Lehman Brothers investment bank in late 2008, the ECB started pumping liquidity into the eurozone banking system on an unlimited basis.

Mr Weber said the year-end period was “usually surrounded by some uncertainty regarding the liquidity situation” but he said “it’s clear we need to re-embark on a normalisation procedure”.

So far, the ECB has pledged to keep supplying unlimited weekly and monthly liquidity until early October. No three-month offers have been scheduled beyond the end of September.

The ECB has been encouraged by recent signs of eurozone financial market confidence returning and a pick up in economic growth. Mr Weber said the ECB’s growth forecasts were likely to be revised up next month following the 2.2 per cent rise in German gross domestic product in the second quarter compared with the previous three months.

The Bundesbank and ECB on Friday had no comment on Mr Weber’s remarks. 

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