Honouring Otmar Issing at 85
From 1990 to 1998, Otmar Issing was the Bundesbank’s chief economist. As chief economist at the European Central Bank (ECB), he was responsible for crafting the ECB Governing Council’s monetary policy strategy. Speaking at an academic colloquium to mark Mr Issing’s 85th birthday, Bundesbank President Jens Weidmann said that Mr Issing had shaped the landscape of monetary policy in Europe like few others. Addressing Mr Issing, Mr Weidmann said that,
“To this day, the Bundesbank and the ECB are still reaping the benefits of your legacy.”
The Bundesbank President singled out Mr Issing’s successful guiding of the then brand new ECB as its chief economist as the greatest distinction of his career. “You played a key role in building up the ECB’s credibility and reputation as an institution focused on maintaining price stability,” he continued.
ECB strategy – a masterstroke
As a member of the ECB Executive Board, Mr Issing was responsible for the Directorates General Economics and Research. Together with his team, he developed the “two-pillar strategy”, which the ECB Governing Council still uses to this day as the basis for its monetary policy decisions. As Mr Weidmann explained in his speech, this strategy actually contains three important elements: a quantitative definition of price stability oriented to the medium term, a prominent role for money, and a broadly based assessment of the outlook for price developments.
Mr Weidmann went on to describe Mr Issing’s formulation of a stability-oriented monetary policy strategy at the ECB as his “masterstroke”, explaining that he created it from the ground up in 1998 and also oversaw the review of the strategy in 2003. “I believe you would agree that no monetary policy strategy should be set in stone. Instead, it should adapt to changing circumstances, and circumstances have certainly changed over the past 18 years,” said the Bundesbank President, adding that the current review should thus translate this strategy to the challenges of our time.
Significant contribution to trust in the euro
The significant contribution that Mr Issing made to the development of the ECB’s strategy was also highlighted by former ECB President Jean-Claude Trichet in his speech at the virtual colloquium. The two men worked together for many years at the ECB. Mr Trichet hailed the high level of support for the euro and trust in the currency to this day as a great success for Mr Issing – especially in Germany.
In 2006, at the age of 70, Otmar Issing retired from the ECB after the end of his eight-year term as chief economist. Today, he is President of the Center for Financial Studies in Frankfurt am Main. He celebrated his 85th birthday in March 2021.