Frankfurt  - The German central bank, or Bundesbank, demoted outspoken board member Thilo Sarrazin on Tuesday, over his outspoken criticism last month of Turkish and Arab immigrants living in Germany.

Sarrazin, 64, has lost his responsibility for the central bank's cash division, but remains in charge of information technology (IT) and risk control, according to a decision made by the management board.

Bundesbank President Axel Weber was a strong proponent of the move to dethrone Sarrazin, according to sources within the bank. Board member Hans Georg Fabritius is to take over the cash division with immediate effect.

Sarrazin, of the Social Democrats (SPD), had made the derogatory comments in an interview with culture magazine Lettre International, whom he told that Arabic and Turkish immigrants were "unwilling, and unable to integrate."

His attacks were aimed in particular at foreigners living in Berlin where, in his opinion, "Forty per cent of all births occur in the underclasses."

"A large number of Arabs and Turks in this city, whose number has grown through bad policies, have no productive function other than as fruit and vegetable vendors," Sarrazin told the magazine.

The former Berlin finance minister, known for his barbed tongue, has since apologized for his comments but declined to step down from his position with the Bundesbank.

State prosecutors are investigating whether Sarrazin could be charged with sedition for his remarks.

Meanwhile a survey conducted for German daily Bild found that 51 per cent of Germans agreed that many immigrants of Turkish and Arabic background were not doing enough to integrate in Germany. Of the 501 people questioned, 39 per cent disagreed with Sarrazin's remarks.

Germany's integration policies are also up for discussion during coalition talks aimed at drawing up a legislative framework for the new government, after last month's general election.

There is talk of setting up an integration ministry, while a proposal by the Christian Democrats (CDU) would place pressure on foreigners living in Germany to learn German.(dpa)