EU appoints Draghi to ECB, Bini Smaghi to leave

BRUSSELS (Reuters) - EU leaders appointed Italy’s Mario Draghi as the next president of the European Central Bank on Friday and said another Italian would step down from the ECB’s Executive Board early to smooth the process.

Bank of Italy Governor Mario Draghi attends the European Parliament economic and monetary affairs committee for hearing on proposed appointment as European Central Bank (ECB) president in Brussels in this June 14, 2011 file photo. REUTERS/Francois Lenoir/Files

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

The 63-year-old economist and banker will replace France’s Jean-Claude Trichet, who steps down at the end of October after eight years in the euro zone’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.


Bini Smaghi wants to avoid any impression that pressure on him could compromise the ECB’s independence, and therefore thinks he should only leave his current post for a similar and not inferior position, the source said.

The job that most appears to fit the bill is Draghi’s post at the Bank of Italy, which would allow Bini Smaghi to keep a vote on the ECB’s Governing Council.

“As President Trichet said earlier, all the members of the executive board have been appointed for eight years according to the Treaty,” an ECB spokesman said. “Mr Bini Smaghi will take any future decision in full independence.”

Berlusconi told reporters in Brussels that Bini Smaghi was one of three candidates to succeed Draghi as head of the Bank of Italy, adding that a decision on the replacement had not yet been made but a candidate would be proposed next week.

Euro zone sources said the ECB was expected to issue a statement later on Friday, or over the weekend.

While Draghi, a highly respected economist and banker, has won widespread backing for his candidacy in recent months, there were concerns earlier in the process that his nationality and past employment with Goldman Sachs GS.N could hinder his pathway to Europe's top central banking job.

In appearances before the European Parliament’s finance committee, Draghi has made clear that his role at Goldman Sachs between 2002 and 2005 did not involve selling financial instruments but was largely an advisory position.

He has also underlined his experience in overseeing Europe’s Financial Stability Board, and emphasised the common thinking he shares with Trichet on monetary policy and on the risks to the financial system of a failure to tackle Greece’s debt crisis.

Additional reporting by Gavin Jones in Rome, Giselda Vagnoni and Francesco Guarascio in Brussels and Marc Jones in Frankfurt; editing by Patrick Graham/Ruth Pitchford/Ron Askew