31.05.201902:10 Forex Analysis & Reviews: Game of thrones in the EU: Germany's loss will win the Euro

The results of the elections to the European Parliament were quite unexpected, at least in several aspects. First, the popularity of right-wing political forces in the EU countries has been greatly exaggerated - populists still remain on the margins of the political life of Europe. But the "traditional" European parties also lost their points: for the first time in the entire history of the European Parliament, the European Popular Party and the Social Democrats no longer have an absolute majority. In this convocation of parliament, they cannot create a coalition and, consequently, determine personnel policy in the power structure of the bodies of the European Union. In an unexpected way, this fact can have a positive effect on the positions of the single currency, which has recently been going through hard times.

Long before the parliamentary elections, the press "walked" that Berlin would lobby for the post of the head of the European Commission representative of its state, namely the candidate of the European People's Party, Manfred Weber. For the sake of this post, Angela Merkel was ready to "exchange" the position of head of the ECB. Although for several years, the market was confident that the Germans would lobby for the position of head of the European Central Bank Jens Weidmann, who now heads the Bundesbank and is on the Board of Governors of the European Central Bank. This has been discussed for a long time - both among bank analysts and among economic observers. All these rumors were based on the fact that the Germans, in principle, are unhappy with the policies implemented by Mario Draghi.

By the way, now this is hardly remembered, but seven years ago, when the eurozone was experiencing the most acute phase of the crisis, some German politicians called Draghi a "European counterfeiter". In their opinion, the head of the ECB then illegally "turned on the printing press", since the redemption of bonds violated a law prohibiting the European regulator to directly finance governments. Of course, most economists in Germany and representatives of business groups were not so radical in their statements - but many of them publicly criticized and still criticize the current head of the ECB for their soft policy.

Jens Weidmann himself also repeatedly spoke of the need for a gradual tightening of monetary policy. Even in the present conditions, when the main economic indicators of the eurozone have slowed down, it maintains a fairly "hawkish" position. Just two weeks ago, he stated that there was no need to postpone the normalization of the policy, "if forecasts allow it to be done". In addition, Weidmann has always been an open opponent of the mechanism of redemption of bonds and other incentives from the ECB. Of course, if Italy brings the situation to a debt crisis, the regulator will have to return to unconventional measures, but for Weidmann, it will be a difficult decision because of his position. He often repeats the phrase that markets should not underestimate the risks of a very soft monetary policy. By the way, In early April, Mario Draghi himself emphasized the presence of side effects of the low stakes. Following this statement, an open appeal appeared from German bankers who called on the European Central Bank to introduce a differential rate on deposits - but the ECB subsequently rejected this idea. If Weidmann will stand at the helm of the Central Bank, these intentions may regain their relevance, while the likelihood of monetary policy easing will decrease significantly (I believe that he will resort to such measures only as a last resort).

Thus, the very fact of the appointment of Jens Weidmann as head of the ECB will provide background support for the European currency. Considering how the political struggle unfolds for key positions in the EU structure, it can be assumed that the chances of the Germans have increased in many ways. As mentioned above, the German Chancellor was ready to "exchange" the position of the head of the ECB for the position of head of the European Commission, which is now headed by the representative of Luxembourg, Jean-Claude Juncker. But the results of the elections to the European Parliament do not allow the Germans to apply for this post: the center-right of the EPP and the center-left of the group of socialists and democrats do not have 50 votes for the majority to determine who should lead the European Commission (in this case the German Manfred Weber).

But the liberals (ALDE) achieved good results in the elections, significantly strengthening their positions and becoming, in fact, the owners of the "Golden share" (with them, the ENB and the socialists can form a majority). That is why Weber's chances of leading the EC are now quite low - EU leaders have been actively negotiating other candidates in recent days. According to experts, this could be the representative of Denmark Margrethe Vestager (the most likely candidate) or the current first deputy of Jean-Claude Juncker, the Dutchman Frans Timmermans. In turn, the post of head of the ECB can become a "consolation prize" for Germany, which nevertheless, retains its influence on the political Olympus of the EU. If further events will unfold under this scenario, the euro will receive some support.