Draghi secures top post in ECB

EU LEADERS appointed Italy’s Mario Draghi as the next president of the European Central Bank yesterday and said another Italian would step down from the ECB’s executive board early to smooth the process.

In draft conclusions agreed at a summit in Brussels, EU leaders “appointed Mr Mario Draghi president of the European Central Bank from November 1 2011 to October 31 2019”.

The 63-year-old Italian economist and banker will replace France’s Jean-Claude Trichet, who steps down at the end of October after eight years in the eurozone’s top monetary policy post.

French officials had expressed concern in recent weeks about Draghi’s appointment as it would have meant two Italians being on the ECB’s six-member executive board with no French representation. The other Italian, Lorenzo Bini Smaghi, is not due to leave his eight-year post until May 2013.

In April, Italian Prime Minister Silvio Berlusconi promised French President Nicolas Sarkozy that Italy would yield Bini Smaghi’s place on the board to a French candidate in return for France’s backing of Draghi for president.

That proved problematic, with Bini Smaghi saying he had absolutely no intention of stepping down early. However, Sarkozy said at the EU summit that Bini Smaghi had told him he would quit his post on the board early.

“Lorenzo Bini Smaghi telephoned me to say that before the end of the year he would be appointed to new duties,” Sarkozy told a news conference, without saying who might replace him.

European Council president Herman Van Rompuy had a similar conversation: “I spoke to Mr Smaghi this morning by phone and he did tell me personally that he would not see his mandate as a member of the board through to its end,” he said.

“It’s up to Mr Smaghi to decide what timetable he may have.”

One source familiar with the situation said Bini Smaghi still believed the outcome would rest with the Italian government, and he would not be pressed into leaving unless the government found him a suitable alternative.

The job that most appears to fit the bill is Draghi’s post: governor at the Bank of Italy.