November 25, 2011

France Nominates Treasury Official for ECB Board

Appointment would give France voice missing since Trichet retirement

France has nominated its second-highest Treasury official, Benoit Coeure, to a seat on the European Central Bank’s six-member executive board. If Coeure is appointed, he would once again give France a voice in the ECB’s policies and decisions, something it has lacked since the retirement of Jean-Claude Trichet from the ECB’s presidency at the end of October. He would replace Lorenzo Bini Smaghi, who will leave his seat on Jan. 1. 

Bloomberg reported that Coeure’s nomination continues France’s tradition of choosing candidates from among finance ministry staff. Finance Minister Francois Baroin said of the nomination in a statement on Thursday, “Benoit Coeure has the experience and the authority required in monetary and banking fields.” Euro area leaders must approve the nomination before Coeure will be allowed to take up the post.

Pierre-Olivier Beffy, chief economist at Exane BNP Paribas, commented in a statement that a single appointment “won’t change the ECB worldview. The ECB’s condition for more support is that the necessary budgetary measures are taken and a coherent integration plan is in place.”

Jean-Claude TrichetThe ECB has seen a number of changes in its makeup in 2011. Trichet (left), of course, left at the end of October at the conclusion of his term as president. And four executive board members have departed this year. Austria’s Gertrude Tumpel-Gugerell left at the end of a six-year term in May, and Juergen Stark from Germany used his September resignation as a protest against the central bank’s government bond purchases.

Bini Smaghi is the fourth member to leave; he resigned Nov. 11 to join Harvard University’s Center for International Affairs in 2012. French President Nicolas Sarkozy backed Mario Draghi’s candidacy to take over the presidency of the ECB from Trichet in exchange for Italian Prime Minister Silvio Berlusconi getting Bini Smaghi to agree to depart and make room for a French candidate.

Bini Smaghi originally declined to step down before the end of his term, so France stepped up pressure on Italy and Sarkozy calling on the country to honor its commitment. On Oct. 24, Berlusconi said he didn’t want the issue to be a “casus belli” with France, but added that he was powerless to make Bini Smaghi leave against his will.

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