POEHL LOOKS SET FOR EIGHT MORE YEARS AT BUNDESBANK
  For currency dealers Karl Otto Poehl is
  the scourge of speculators, for bankers he is the man who has
  played a key role in shaping the world's financial destiny for
  the last seven years, and for Germans he is the guardian of the
  mark.
      President of the powerful and independent West German
  central bank, the Bundesbank, Poehl is likely to have his
  contract renewed for another eight years when it expires at the
  end of this year, government officials say.
      (Index of economic spotlights, see page ECRA)
      But no official announcement has yet been made, raising
  eyebrows in West Germany's business community.
      The ebullient Poehl spent seven years in Bonn in top
  ministerial posts under the Social Democrats, now in
  opposition, before he moved to the Bundesbank.
      There has been speculation that Chancellor Helmut Kohl
  would try to replace Poehl with a man closer to his own
  Christian Democrats. But officials noted that Poehl has worked
  closely and successfully with Finance Minister Gerhard
  Stoltenberg since Kohl's government took office in 1982.
      Poehl, the most senior central banker apart from Paul
  Volcker of the United States, enjoys a strong international
  reputation which it would take a newcomer years to build up.
      Given these circumstances, Kohl will probably overlook
  Poehl's past as an adviser to former Social Democrat Chancellor
  Willy Brandt, and top aide to Helmut Schmidt when he was
  Finance Minister, bankers said. It was Schmidt who, as
  Chancellor, appointed Poehl to his present job in 1980.
      In recent months, with the mark's strong rise against the
  dollar, Poehl has made exchange rates the central concern of
  the Bundesbank's council, a highly conservative institution
  which has doggedly pursued monetary policies to prevent
  inflation catching hold. Older Germans can remember two bouts
  of galloping inflation this century.
      But with consumer prices falling for much of 1986, and
  inflation negligible so far this year, Poehl thinks it is safe
  to relax the monetary reins a little and concentrate on the
  dangers to the German economy of a bloated exchange rate.
      "I am of the opinion that efforts to stabilise the
  dollar/mark rate have reached a high priority, also for the
  Bundesbank, because a further massive revaluation of the mark
  would endanger the economy in West Germany," he told business
  journalists in Frankfurt recently.
      Ute Geipel, head of research at Citibank AG, says that
  Poehl's reappointment would guarantee flexible monetary policy.
      "Poehl's policy has always been a policy which does not
  focus so rigidly on domestic factors, but also on the external
  economy," she said.
      An economist at a German bank, who declined to be
  identified, said "If Poehl is confirmed in his post, it will
  certainly be a plus for the pragmatic course which is not so
  rigidly oriented towards money supply."
      One of Poehl's great struggles recently has been to
  persuade the United States to stop "talking down" the dollar. For
  Poehl, the significance of the February Louvre Accord was that
  the United States agreed to join efforts to stabilise
  currencies.
      The Louvre Accord was greeted with scepticism by currency
  dealers who said they would soon put it to the test. But in
  fact the dollar has been relatively stable since the pact.
      "This is because the markets know - or perhaps because they
  don't know - what the central banks can do," Poehl says of
  intervention in currency markets which can quickly turn rates
  round, making a speculator's position worthless.
      Poehl was born in 1929 and worked as a financial journalist
  in the 1960s before starting his ministerial career.
      A relaxed sun-tanned figure who enjoys cracking jokes over
  a glass of beer, he is hardly a stereotype central banker.
      He is also a keen sportsman who likes to watch football and
  play golf.
      Poehl says currency market intervention cannot substitute
  for correct economic policies if exchange rates are imbalanced.
      "But you can achieve an enormous effect with a small amount
  if you strike at the right moment," he said. Bundesbank dealers
  are very professional and skilled. "They've burnt the fingers of
  many people," he said. And unlike the speculators, Poehl notes,
  the Bundesbank dealers usually make a profit.
  

