Poehl Plans to Retire as Head of Bundesbank : Germany: Although he cited ‘personal reasons’ for the move, the central banker has had bitter clashes with Chancellor Helmut Kohl over the terms of last year’s currency union.

Citing personal rather than political reasons, Europe’s leading central banker, German Bundesbank President Karl Otto Poehl, said Thursday that he will resign later this year, four years before the end of his current term.

“I have today informed the bank’s central council of my wish to leave in the course of this year on personal grounds,” Poehl, 61, said in a nine-point written statement issued by the Bundesbank in Frankfurt after the council’s morning meeting. “In agreement with the government, I am looking toward October as a departure date.”

Poehl, who said he wanted to devote more time to family and private interests, is expected to enter private industry.

Despite his stress on the personal nature of his decision--the words “personal grounds” were the only ones underlined in the distributed text--the veteran central banker has had bitter differences with Chancellor Helmut Kohl over the terms of last year’s German currency union. Poehl is believed to have questioned the strength of political backing from Bonn as he faced a highly sensitive internal reorganization of the Bundesbank required by unification.

“There are many things that contribute to such a decision,” Poehl told reporters at a Frankfurt news conference.

His announcement followed months of speculation about his possible departure that culminated in a series of front-page news reports earlier this week. Poehl has headed Europe’s most powerful central bank for 11 years, and his term was to run through 1995.

The intensity of recent speculation, coupled with the weakness of official denials, meant that European money markets had largely adjusted to the announcement earlier in the week. The mark remained stable throughout the day on European money markets.

There is also the belief in European financial circles that the tight German monetary policy that Poehl came to personify is a mark of the Bundesbank as an institution rather than Poehl as an individual. “We don’t expect any change in policy there,” noted Michael Wilson, head of the foreign exchange department at Morgan Grenfell in London.

Poehl is likely to be succeeded by either Hans Tietmeyer, 59, a Bundesbank board member and the man chiefly responsible for last year’s German monetary union, or Bundesbank Vice President Helmut Schlesinger, 66. The government is expected to name the successor within the next two weeks.

European financial community sources interpret the appointment of Tietmeyer or Schlesinger as a signal of a continuity of the Bundesbank’s strict policy of price stability and tight monetary controls--a policy that has given Germany decades of steady growth and low inflation but often has drawn the wrath of foreigners who have accused the Germans of shirking a larger responsibility as a locomotive for stronger global growth.

Only last month, Germany rebuffed U.S. pressure--including a personal plea from President Bush--to lower mark interest rates as part of a plan to stimulate growth in several recession-plagued Western countries, including the United States.

“Tietmeyer is a renowned adherent to the primacy of price stability,” said Hans-Peter Froehlich, monetary affairs specialist at the Institute for the German Economy in Cologne.

The timing of Poehl’s announcement is believed to have been influenced in part by his desire to bow out on a strong note. Only last week he got his way on a crucial decision of European Community finance ministers to back a “two-speed approach” to forging full economic and monetary union among the EC’s 12 member states. The two-speed concept calls for an initial union among community countries with stronger, harder currencies (such as Germany, France and the Netherlands) while giving weaker nations (such as Greece and Portugal) more time to make the difficult economic adjustments required for such a union.

Poehl’s backing of this concept--seen by many advocates of European unity as a negation of their dream--was typical for the urbane central banker, whose tough, pragmatic, often unpopular approach to monetary affairs often put him at odds with political leaders yet made him a highly respected and influential voice in Europe’s financial affairs.

His offhand comment made last month that the July, 1990, German economic and currency union had proven to be a disaster sent the mark tumbling on foreign exchange markets. Some compare Poehl’s role to that of former Federal Reserve Bank Chairman Paul A. Volcker, who came to be seen as a personal guarantor against inflation during the early 1980s.

Those in the German financial community, however, expect little change in Bundesbank direction with Poehl’s departure. “The direction of German monetary policy is set by the (Bundesbank) as an institution, not by a single individual,” said Rolf Schneider, chief economic forecaster at the Dresdner Bank in Frankfurt.

The force of Poehl’s personality, backed by the power of the German economy, were the keys to his influence. “Poehl is unique because he combined, in an extraordinary way, the technical skills of monetary policy with a keen sense of diplomacy,” Froehlich said. “He could criticize his opponents without offending them; he knew how to forge a consensus. This is a rare ability, especially in a German.”

At a time of momentous change in Europe and within Germany, Poehl has been a major player. In addition to his support for the two-speed union, for example, he drafted the statute for an EC central bank. It has become the basis for negotiations in Brussels. Instead of a central bank under strong political control, as advocated by the French and British, with Poehl’s influence that bank will be similar in its freedom and scope of authority to the German Bundesbank.

The primacy of price stability, as recommended by Poehl, was written into the draft statute signed by all 12 EC central bankers just before Christmas.

He has also been instrumental in winning crucial support domestically for a European currency union that is almost certain to replace his country’s rock-steady mark with a weaker, less predictable Eurocurrency.