Likely new ECB chief may be more sympathetic to Ireland
Published 25/04/2011 | 05:00
Ireland may get a more sympathetic figure leading the ECB from October as Bank of Italy governor Mario Draghi emerged at the weekend as a virtual shoo-in for the post.
France is now reported to be backing Mr Draghi, meaning that unless German Chancellor Angela Merkel decides to reject him, the Italian becomes the de facto successor to Jean-Claude Trichet, who steps down in October as president of the ECB.
While not expected to deviate radically from the direction set by Mr Trichet, Mr Draghi, coming from a country with a debt burden totalling 120pc of GDP, is likely to be more sensitive to the position of so-called 'peripheral Europe', which includes Ireland, Greece, Portugal and for some, Spain.
As a former Goldman Sachs banker, Mr Draghi is also keenly aware of the funding problems of European banks in these peripheral countries and has spoken in recent months of coming up with a solution for these so-called "addicted" banks.
However Mr Draghi is not likely to halt the ECB's interest rate hiking cycle in the short term and in the first year of his period of office many believe he may look to "out Trichet Trichet", in terms of promoting budgetary discipline and inflation dampening.
It emerged over the weekend that French President Nicolas Sarkozy considers Mr Draghi the leading candidate to succeed Mr Trichet at the helm.
Mr Draghi's status as the only candidate from among the four biggest euro nations -- France, Germany, Italy and Spain -- makes him the most viable choice.
The French leader may make his views public as early as tomorrow at a joint briefing in Rome with Italian Prime Minister Silvio Berlusconi, a Sarkozy aide told reporters.
The key decision maker, Ms Merkel, has yet to tip her hand. With a late-June deadline to make the appointment, Mr Draghi's career and the ECB's fate are caught up in her political calculus.
As Portugal's looming rescue pushes the cost of aiding euro states past €250bn, Ms Merkel, who is struggling to rally support for bailouts at home, may face domestic criticism for choosing a southern European from a country with a legacy of inflation and debt.
Mr Draghi has emerged as a front-runner since Germany's Axel Weber withdrew from the race in February. Mr Draghi is chairman of the Financial Stability Board, which was established by the Group of 20 nations in 2009 to oversee development of standards to strengthen global regulation. (Additional report by Bloomberg)