European Central Bank chief to stay on indefinitely, April 2003

Wim Duisenberg, the President of the European Central Bank, has agreed to stay on in his role indefinitely if EU Heads of State agree to a proposal put forward by EU finance ministers that Mr. Duisenberg should remain in function until a duly elected new President is appointed.

The proposal, agreed unanimously at an informal meeting of the Ecofin Council in Athens on 5 April 2003, follows continued uncertainty about whether Jean-Claude Trichet, Duisenberg's designated successor, will be able to take up the role because he is currently embroiled in a banking fraud trial. Mr. Duisenberg had planned to retire on 9 July 2003, his 68th birthday, after more than five years in the role, but he said that he would stay on 'until the day that [his] duly appointed successor takes up office' in the interest of 'a smooth transition'.

According to a compromise agreed by EU leaders in May 1998 when they met to select a President for the European Central Bank Mr. Duisenberg's successor should be of French nationality. After Germany had secured Frankfurt as the seat of the ECB, France insisted that as the EU's second-largest economy it should be entitled to provide the ECB's President, however there were other candidates including Wim Duisenberg from the Netherlands, keen to take on the role. After lengthy negotiations, EU leaders agreed that Mr. Duisenberg should become the ECB's first President but that he would only serve half of his eight year term in office, at which time he would be replaced by a Frenchman.

France proposed that Jean Claude Trichet, who has been head of the French national bank for nearly a decade, should take up the role. Mr Trichet is widely respected in the financial world and many believe that he should have been handed the ECB President's job at the outset. However, in April 2000, Mr. Trichet was put under formal investigation for allegedly spreading false information to the financial markets about the state of the French bank, Credit Lyonnais, in the early 1990s when he was a top Treasury official. Then in July 2002, the French magistrate responsible for the case, Philippe Courroye, acted against the advice of state prosecutors and ruled that Mr. Trichet should stand trial along with eight others for their part in the Credit Lyonnais fiasco, which culminated in a €31 billion bailout by the state.

The verdict of the trial, which began in January 2003, is not expected until 18 June 2003 thus prompting EU finance ministers to ask Mr. Duisenberg to stay on if necessary, although few observers think that Mr. Trichet will be found guilty. However, if he is a Frenchman is still expected to succeed Mr. Duisenberg, with Christian Noyer, former vice president of the European Central Bank, and Jean Lemierre, president of the European Bank for Reconstruction and Development, the most likely candidates.

Links:
The Greek Presidency of the EU 2003:
	05.04.03:	Press Release: Statement by minister of economy and finance Mr Nikos Christidoulakis to the press
The European Central Bank
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	The members of the decision-making bodies
European Sources Online: Financial Times:
	07.04.03:	No date for ECB chief to depart
BBC News Online:
	06.04.03:	Euro bank chief to stay on
	12.02.03:	Verdict date set for French bank chief
	06.01.03:	Jean-Claude Trichet: Banker in a bind
	16.07.03:	French bank chief to stand trial
European Sources Online: Topic Guides
	The European Central Bank

Helen Bower

Compiled: Monday, 7 April 2003

Wim Duisenberg, the President of the European Central Bank, has agreed to stay on in his role indefinitely despite his plans to retire in July 2003.