The West German Who Would Be the World’s Next Paul Volcker

BONN —  It is time for Americans to get to know Karl Otto Poehl, president of West Germany’s Central Bank. As Bonn and Berlin rush to reunify, Poehl will oversee his country’s economic and monetary union. When a reunified and economically dominant Germany emerges, Poehl will seal his place as the Continent’s top central banker.

Poehl is no mere foreign technician operating 8,000 miles away and providing statistical fodder for economic pundits. He’s an economic force to be reckoned with, someone whose clout rivals that wielded by Japan, Inc.’s managers. Poehl is added proof that the international economy is no longer an annex of the United States, but one operating outside the control of any single country. America must adapt or suffer the consequences.

Central bankers are a mysterious lot--high priests of capitalism whose magical mutterings only the initiated can divine. In world central banking, the cardinal gets to be Pope-like--not all powerful, but a global figure. National monetary politics are intertwined; what happens to interest rates in West Germany and Japan affects what happens to them in the United States, and vice versa.

For most of the ‘80s, Paul A. Volcker was the dominant force in central banking. When he stepped down as Federal Reserve chairman in July, 1987, his successor, Alan Greenspan, took the throne, recognized by his peers, and with the approval of the world’s investors.

Now, however, Greenspan’s influence shrinks, while Poehl’s grows. As a result, the president of West Germany’s central bank is the Pope-apparent.

Working out of an office on the outskirts of Frankfurt, Poehl was appointed vice president of the Bundesbank in 1977, becoming its president three years later. His second eight-year term will not end until 1995, when he will be 66.

Poehl is protected, by law, from Bonn’s meddlesome politicians. Greenspan enjoys similar protection, but there are noises on Capitol Hill about clipping the Fed’s wings. (Japan’s central banker can never be Pope; he has to do what the Ministry of Finance tells him to.) Thus Poehl appears more securely independent--the first criterion of being central-banking Pope.

Poehl is also gaining control over more and more of the world’s money. Before 1991, he is likely to be dictating monetary policy in East and West Germany. By next year, he may be ruling the money flow in Eastern Europe. As the Soviets retreat from Eastern Europe, so goes the ruble. As East Bloc nations distance themselves from the Soviet currency, the obvious replacement is East Europe’s reserve currency--the deutsche mark.

Finally, Poehl’s central-banking star is rising ever higher because more and more of the world’s investors take their cues from him. The currency he manages is riding high, gaining roughly 6.5% on the dollar, 25% on the yen since last year.

But Poehl has another advantage: He attracts attention through the sheer force of personality. Rascally, politically shrewd, a lover of good gossip, fine wine and fast ski slopes who can hold his own in serious intellectual debate, Poehl, like Volcker in the ‘80s, is a contradiction in terms--a charismatic central banker.

Germany’s reunification poses problems for the Bundesbank, as investors assess what it will mean for West German stocks and bonds. Frankfurt financial markets are already in turmoil. But one theory holds that as East Germany and Europe are reconfigured, Poehl will be shaping events, not submitting to them.

Some Americans may pooh-pooh such prospects. Cold War warriors will continue to view the dismantling of the Berlin Wall and other dramatic political events as evidence for America’s triumph rather than Poehl’s ascendancy. Even so, distinctions between capitalist and communist--eventually between industrial and developing--economies will break down in the emerging era. The static economic hierarchies that jelled around the Cold War will dissolve into a kinetic system embroiled in an economic free-for-all.

If the United States is to hold its own, it must do more than reduce its budget deficit, boost its savings or even gird for competition against Japan. Volcker and the days of the super-dollar are over. Now is the time to know Poehl--and a lot more about the international economy.