HANS TIETMEYER

By Jay Branegan

If the Romans had a god of central banking, he might look like Hans Tietmeyer. Tall, square-jawed, with white hair that often looks a bit windblown, and above all stern, the president of Germany's fiercely independent Bundesbank always seems ready to hurl down a thunderbolt against any sign of inflation. In fact, his role is nearly that Olympian. Europe's most powerful central banker, Tietmeyer has far more influence than any other individual over the Continent's interest rates, exchange rates and the course of its struggling economic rebound. This year he will be a pivotal figure in determining the fate of the European Union's ambitious but risky plan to create a single currency, the euro. "On paper he has no role whatever," says Daniel Gros, a monetary expert at Brussels' Center for European Policy Studies. "But because of his position, Tietmeyer is key."

Next year is crucial for the euro, which formally begins circulating in 1999. Economic performance in 1997 will be the basis for deciding, early in 1998, which nations meet the Maastricht Treaty criteria on debt, deficits and inflation that underlie the currency union. Bundesbank policies can help or hurt plans by many countries, including Germany, to meet the criteria by boosting economic growth. But more important, Tietmeyer's mere utterances, like those of his U.S. counterpart, Alan Greenspan, can move markets or puncture investor confidence. His blessing of the euro venture would be a welcome seal of approval, but he could waylay the entire program if he declares its underlying fiscal arrangements to be flawed, and he could hinder the entry of any nation he feels does not meet Maastricht standards.

In public, Tietmeyer backs the single-currency idea. But he has been adamant in calling for strict application of the Maastricht criteria and for ironclad rules to support the euro, so that it will be as strong as the German mark. Some believe that privately he is a single-currency foe fearful of losing his power to the new European Central Bank. Former German Chancellor Helmut Schmidt, in an extraordinary open letter last year, branded Tietmeyer's stance as anti-European. "If you continue with your stubborn policies," Schmidt wrote to the banker, "Germany will become isolated."

Such harsh criticism of a Bundesbank chief is rarely voiced in Germany. But Tietmeyer, 65, who survived an assassination attempt by the ultraleftist German Red Army Faction, is used to taking the heat for tough decisions. A senior economic-policy bureaucrat and later the top civil servant in the Finance Ministry, he was Germany's negotiator during the contentious exchange-rate talks of the 1980s. A staunch conservative on monetary policy, Tietmeyer nonetheless has supported European integration, and as far back as the 1970s sat on a committee that drafted an early plan for monetary union.

A member of the German central-bank board since 1990 and its president since 1993, Tietmeyer stresses, "I cannot defeat the euro project, and I will not defeat the project, because I'm in favor of it on condition that it is based on a stable and solid foundation." But he quickly adds, "It is my duty and responsibility to see that there are enough safeguards." One moment of truth will be early next year when Europe's central-bank governors issue their judgment on which countries have truly met the Maastricht criteria without accounting tricks. While Tietmeyer hopes for a consensus report, he allows, "We have agreed that if necessary, we would present different views." If they do, his are sure to carry a special weight.

--By Jay Branegan