April 12, 2011

After Trichet, ECB Chief Is Likely to Be Italy’s Draghi

Other candidates not seen as strong rivals for position

The announcement by Axel Weber in February that he was withdrawing his name from consideration as the next head of the European Central Bank (ECB) opened the field to other candidates, but as time has passed Mario Draghi, head of Italy’s central bank, has emerged as the strongest of those. And on Monday some euro zone officials were reportedly commenting on Draghi’s likely appointment as a “done deal.”

Reuters reported that, with the head of Germany’s Bundesbank out of the running, none of the other candidates has threatened Draghi’s position as front-runner and likely successor to Jean-Claude Trichet, who has held the post for eight years. It was originally thought that Angela Merkel, Germany’s prime minister, would push for another German to step up in Weber’s stead to challenge Draghi, but now it appears that is not the case.

One German government official was quoted in the report as saying, "I think we are beyond the point in Europe where the qualifications of a person are seen primarily through the prism of their nationality. We can't put forward a candidate just because he is German. And another candidate wouldn't be bad just because he's Italian." The official praised the work Draghi has done to coordinate global financial regulation as head of the Financial Stability Board.

Other viable candidates included Erkki Liikanen, head of the Finnish central bank; Luxembourg's Yves Mersch; Nout Wellink, who heads the Dutch central bank; and European Financial Stability Facility (EFSF) head Klaus Regling. However, none of the others have strong support, and although Draghi's stint at Goldman Sachs could be seen as a black mark against him (his other posts have included the World Bank, teaching at Harvard University, and working for the government), that apparently will not be the case. Goldman has come in for serious criticism for the part it played in the financial crisis.

One other potential candidate is Christian Noyer, head of the Bank of France, who is believed to want the top spot at the ECB. And the strongest criticism of Draghi’s time at Goldman has come from French officials who, although they have cited that as a reason for vetoing Draghi, may want to give Noyer the opportunity.

While Trichet’s term expires at the end of October, a decision is expected on his successor by the end of June.

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