(Bloomberg) -- Helmut Schlesinger, who as president of Germany’s Bundesbank battled inflation and tensions over monetary policy following the reunification of his country in 1990, has died. He was 100.
He died on Dec. 23, the Bundesbank said in a statement on Friday.
“Helmut Schlesinger’s actions always followed clear and consistent lines aimed at maintaining monetary stability,” Bundesbank President Joachim Nagel said. “In his over 41 years at the Bundesbank, he made a great contribution to making the D-Mark one of the world’s most stable currencies and also the anchor of stability in the subsequent European Monetary System.”
Schlesinger was a key figure for more than two decades at Germany’s central bank, the most powerful in Europe until the 1998 creation of the European Central Bank. He served as a board member in the 1970s and as vice president in the 1980s.
His presidency was brief, from 1991 to 1993, but consequential. He managed an exchange-rate crisis that revealed regional discord over Germany’s tough inflation stance at a time when national currencies were converging toward monetary union in 1999.
“Germany offers, so to speak, a good ‘mother earth’ for an anti-inflation money policy in Europe,” Schlesinger said, according to a 1992 article in London’s Times newspaper.
As Germany wrestled with inflation of more than 4%, triggered when its eastern states adopted the deutsche mark, the Bundesbank raised interest rates three times in the first year of Schlesinger’s tenure. With their currencies pegged to the mark, Germany’s neighbors urged Schlesinger, described by BusinessWeek in 1991 as a “dyed-in-the-wool monetarist hawk,” to help ease borrowing costs in a bid to stimulate their economies.
British Departure
The standoff led to the UK’s exit from Europe’s exchange-rate mechanism on Sept. 16, 1992, and more flexibility on national exchange rates for its remaining members. Only a day before the UK departure, the Bundesbank announced the first of six rate cuts that came in the remainder of Schlesinger’s time in office.
“All our decisions were carefully watched by the entire world, occasionally with praise, but usually with criticism that often turned the president into a scapegoat, and he bore it all with admirable composure,” Guenther Storch, a Bundesbank board member, said in a speech in 1993.
An adept mountain climber, Schlesinger maintained a daily fitness routine by scaling the 12 flights of stairs to his office at the Bundesbank, David Marsh wrote in The Bundesbank: The Bank That Rules Europe (1992).
“In addition to his powers of endurance, Schlesinger is characterized by the great loyalty he shows to the institution in which he has grown up,” Marsh wrote. “He is the Boy Scout of German central banking.”
Early Life
Helmut Franz Schlesinger was born on Sept. 4, 1924, in the Bavarian city of Penzberg, about 30 miles (48 kilometers) south of Munich.
He attended Bavarian boarding schools until 1943, when he spent two years in the military during World War II. He earned an economics degree in 1948 and a doctorate in economics and political science at the University of Munich three years later, according to his Bundesbank profile.
After working for the Munich-based Ifo Institute for Economic Research from 1949 to 1952, Schlesinger joined the Bank Deutscher Laender, a forerunner of the Bundesbank, which was established in 1957. He became a board member and chief economist of the Bundesbank in 1972 and served as vice president from 1980 to 1991, when he replaced the late Karl Otto Poehl. While Poehl resigned officially for personal reasons that year, tensions with then-Chancellor Helmut Kohl about monetary aspects of German unification were rumored to have played a role.
Under Schlesinger, the Maastricht Treaty was signed on Feb. 7, 1992, mapping out the route to European monetary union and the shared euro currency. But there was no similar political union to enable national governments to jointly tackle economic or financial shocks.
In a 2012 interview for the Bundesbank’s staff magazine, the former president called that a “clear defeat” for the independent German central bank, which had warned the new currency could be undermined without political integration. The Bundesbank was revered by Germans for its dedication to fighting inflation and keeping the mark stable.
“It is actually hard to envisage how a loss of monetary sovereignty could be achieved in the absence of a unified state,” he said.
Schlesinger retired in September 1993.
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