Germany’s apparent reluctance to endorse Italian Central Bank head Mario Draghi as the replacement for current ECB President Jean-Claude Trichet when his term ends in six months’ time has dissipated significantly over recent weeks. Indeed, the apparent endorsement from French President Sarkozy on Tuesday seemed to infer that Germany had accepted Draghi as the obvious candidate.
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Angela Merkel in particular was keen for Axel Weber to replace Trichet but he withdrew his candidature abruptly earlier this year. Draghi’s impressive pedigree seems to have won over the doubters: he has been President of the Italian central bank (Banca D’Italia) since late 2005 after four years at Goldman Sachs, he is a professor of economics and had a six-year spell at the World Bank in the 1980s.
Draghi is regarded as a fiscal conservative, a characteristic that likely appeased reluctant Germans. Recently, he also hinted that he supported additional rate rises from the ECB, a position that Germany would appreciate.
In addition, as Chairman of the Financial Stability Board, Draghi is likely to take a firmer line towards European bank supervisors. His approach is likely to be tougher than his predecessor, who was more consensus-oriented.
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