European Central Bank presidential candidate acquitted, June 2003

Jean-Claude Trichet, the Frenchman expected to take over the helm at the European Central Bank (ECB), was acquitted on 18 June 2003 of all responsibility in the collapse of Crédit Lyonnais, paving the way for him to head up the ECB by the end of 2003.

Mr Trichet faced charges concerning his role in the Crédit Lyonnais fiasco in the 1990s, which culminated in a €31 billion bailout by the state. At the time, Mr Trichet was Treasury Secretary at the bank and he stood accused of having signed off accounts that did not suggest that the bank's solvency was in doubt. Mr. Trichet has always declared his innocence, claiming that he was deceived by Crédit Lyonnais himself. However, in July 2002 the French magistrate responsible for the case, Philippe Courroye, acting against the advice of state prosecutors, ruled that Mr. Trichet should stand trial along with eight others for their part in the scandal.

The case threw a shadow over Mr. Trichet's future appointment as President of the European Central Bank, under a compromise deal agreed by EU leaders in May 1998 when they met to select a President for the European Central Bank. 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. However, in April 2003 with Mr. Trichet - France's preferred candidate under investigation - EU leaders officially asked Mr. Duisenberg, the President of the European Central Bank, to stay on in his role indefinitely until a duly elected new President is appointed.

Mr Trichet's acquittal on 18 June should allow him to take over the role of the ECB President and the French President, Jacques Chirac, is expected to call for a formal decision on the ECB succession at the Thessaloniki European Council on 19-20 June 2003. The Greek Government, which has the responsibility for chairing the Presidency, has indicated the likelihood of an informal discussion, confirming support for the original deal. This could mean that Mr. Trichet takes up the post as early as September although most expect it to take until the end of the year. One problem could arise if the French public prosecutor's office decide to appeal against the acquittal since the process would take at least a year by which time other EU Member States might be calling for a different Presidential candidate to be elected.

If Mr. Trichet does succeed Mr. Duisenberg at the ECB then many commentators expect the focus of the ECB's strategy to shift from keeping inflation in check to stimulating growth within the eurozone through a more flexible monetary policy..

Links:
European Sources Online: Financial Times:
	19.06.03:	Trichet gets green light for ECB
	19.06.03:	Trichet will bring best practice to the ECB
	19.06.03:	Sensitive and skilled Trichet set to usher in a new era
BBC News Online:
	19.06.03:	Top banker cleared of cover up
European Central Bank:
	Homepage
European Sources Online: In Focus:
	European Central Bank chief to stay on indefinitely, April 2003
European Sources Online: Topic Guide:
	The European Central Bank

Helen Bower

Compiled: Thursday, 19 June 2003

Keywords: Jean Claude Trichet