Karl Otto Poehl dies at 85; head of Germany’s Bundesbank

Karl Otto Poehl, the Bundesbank president who managed the introduction of the deutsche mark in East Germany before reunification in 1990 and helped lay the foundations for Europe’s common currency, has died. He was 85.

Poehl died Dec. 9, the Frankfurt-based Bundesbank said in a statement on its website. No other details were given.

The onetime journalist upheld the stable money traditions of West Germany’s central bank throughout his tenure from 1980 to 1991. During Helmut Schmidt’s time as West German chancellor, Poehl battled accelerating inflation of more than 6% before Schmidt was removed in a vote of no confidence in 1982. Reestablishing price stability when Helmut Kohl took office, he correctly predicted inflation from East Germany’s adoption of the deutsche mark in July 1990 as the country moved toward reunification.

Poehl “delivered proof that price stability and growth, even in a period of great monetary policy challenges, are not opposites but rather that price stability provides the basis for sustainable growth,” Bundesbank President Jens Weidmann said in the statement.

Poehl’s Bundesbank clashed with Schmidt, who described its interest rate policy as “very dangerous” to economic growth, according to a 1981 article in Spiegel magazine.

A Social Democrat appointed by Schmidt, Poehl was credited with giving West Germany the lowest inflation rate of any industrialized nation during his tenure. Initially a reluctant participant in the German monetary union, Poehl presided over a central bank that was often criticized by the U.S. and French governments for failing to stimulate global economic growth, it said.

“If today there were such a thing as a delectable, international contest for the lowest inflation rate, then you, Mr. Poehl, would be the promoter of this new Olympic discipline,” Bundesbank Vice President Johann Wilhelm Gaddum said in a speech in August 1991.

In 2001, he warned of the consequences that divergent national policies would have for the European project.

“In the long term, economic and monetary union will exert pressure to develop a common policy,” he said in an interview with Germany’s Manager Magazin. “Let’s take fiscal policy. Without an element of coordination, it’s inevitable that tensions will arise in the common market.”

Poehl was born Dec. 1, 1929, in Hanover, Germany. He completed an economics degree in 1955 before heading the publishing department of the Munich-based Ifo Institute for Economic Research until 1960, according to a Bundesbank profile.

After working as a journalist specializing in economics for six years in Bonn, the West German capital, Poehl was an undersecretary in the Finance Ministry from 1972 to 1977. He then became the Bundesbank’s vice president.

Poehl had two children from his first marriage and two from his second, according to Deutsche Presse-Agentur.

Henry writes for Bloomberg News.

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