Politics

Germany’s new face at the ECB: Who’s in the frame?

Joerg Asmussen
Sean Gallup | Getty Images

One of the few surprises lurking in Germany's cabinet re-shuffle was the return of its man at the European Central Bank (ECB), Joerg Asmussen, to Berlin.

His departure from the ECB, for a post as deputy labor minister in the new German government, leaves open the question of who will succeed him to what is arguably one of the most important jobs at the central bank. Germany is the euro zone's biggest economy, so is one of the most influential voices at the central bank. Asmussen had been a key interpreter between German political opinion, which frequently urged a harder line on the euro zone's struggling states, and the ECB's Governing Council.

(Read more: Germany striding ahead)

The tougher German line on policies like the bond-buying program dubbed Outright Monetary Transactions will continue to be represented by Bundesbank President Jens Weidmann. So it is important for the unfolding of the euro zone debt crisis that someone who can urge a softer line in Germany be selected.

As Chancellor Angela Merkel settles in to the new coalition government, anything which suggests Germany may decrease its support for the ECB could unsettle markets.

Who will fill the void left by Asmussen at the ECB?
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Who will fill the void left by Asmussen at the ECB?

"The balancing act between Asmussen's constructive role and the Buba's (Bundesbank) more skeptical positioning has been instrumental for defining Germany's positioning in the crisis," Carsten Nickel, senior vice-president at Teneo Intelligence, told CNBC.

"Any departure from this path would increase the political cost of German euro zone policy-making and is therefore not very likely."

(Read more: Why the euro zone bond rally may be ending)

The three main contenders are all female: Weidmann's deputy Sabine Lautenschlaeger; Elke Koenig, the head of Germany's financial regulator BaFin, and the head of the Halle institute for economic research, Claudia Buch.

Lautenschlaeger, whom German Finance Minister Wolfgang Schaeuble dubbed "well worth considering" for the post in a German radio interview Monday, was being tipped for the post Monday morning. The Bundesbank has taken a hard line on ECB policies like OMTs while she has worked there, although she has not been as outspoken as Weidmann.

"A Germany unengaged with the ECB leadership, and paying more attention to the Bundesbank makes for interesting political drama as the politics of coalitions force Merkel to play a more skeptical European role," warned Bill Blain, strategist at Mint Partners.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.