Welteke resigns over hotel stay

The Bundesbank board says Ernst Welteke's resignation is appropriate

Ernst Welteke, the president of Germany's central bank, has resigned following investigations into a hotel stay paid for by Dresdner Bank.

The row started after a news magazine reported that Mr Welteke and his family accepted a 7,600-euro ($9,200; £5,000) free stay in Berlin's top Adlon Hotel.

Mr Welteke was at a celebration of the euro's first year as a cash currency.

Germany's government has dismissed opposition calls for an inquiry into charges it leaked letters with details.

The opposition Christian Democrat party is accusing the Finance Ministry of starting the story about the Bundesbank chief, by leaking hotel bills and other documents to the news magazine Der Spiegel.

But a government spokesman rejected the allegation as "fantasy".

"Crime thrillers can be an exceptionally exciting read, but sometimes fantasy gets the better of some people," said Thomas Steg.

The relationship of trust between the federal Finance Ministry and myself has been irreparably destroyed Ernst Welteke, former President Bundesbank

The Bundesbank board said the resignation was appropriate "with regard to the reputation of the institution and the exercise of its responsibilities".

A statement from Mr Welteke following his resignation said the German central bank had been subjected to "irresponsible pressure", particularly by the Finance Ministry.

"The board in particular is being subjected to irresponsible pressure," he said.

"The relationship of trust between the federal Finance Ministry and myself has been irreparably destroyed."

The talk within financial and government circles in Germany is about who might replace Mr Welteke.

Deputy Finance Minister Caio Koch-Weser will probably not be picked by the German government because he lacks support in the financial community, a central bank source said.

Mr Koch-Weser was in line to become IMF managing director in 2000, but his application was blocked by the US and other countries.

Other possibilities are Bundesbank Vice President Juergen Stark - who took over as interim president during Mr Welteke's absence - and Ingrid Matthaeus-Maier, a board member of the KfW development bank.

Career peaks

Part of the German central bank chief's role was a seat at the European Central Bank's Governing Council which sets interest rates for the euro zone.

At 61, he has spent 4-1/2 years as Bundesbank President after rising through the Social Democrat ranks and in the first half of the 1990s served under Hans Eichel, Hesse state premier at the time.

Mr Eichel, now Finance Minister, pulled no punches when he made observations of his former political ally's behaviour at the start of the scandal.

His conduct would have been unacceptable in a government minister, he said.