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 The head of Italy's central bank, Draghi is expected to adopt his
predecessor's tough stand on inflation when he takes over the helm
of the ECB on Nov. 1, a day after the term of President Jean-Claude
Trichet expires.
"Mr. Draghi will exercise a strong and independent leadership of the
ECB," said EU President Herman Van Rompuy. "This is essential in
normal times, and indispensable in difficult times."
The timing of Draghi's appointment had come under doubt as fellow
Italian executive board member Lorenzo Bini Smaghi had until Friday
refused to leave his post.
With Bini Smaghi staying on the executive board, France would not
have a representative on the six-person board once Trichet departs
on Oct. 31. The French had previously implied they would only
support Draghi if a French man or woman takes Bini Smaghi's spot.
On Friday, French President Nicolas Sarkozy said Bini Smaghi had
informed him and EU President Van Rompuy that he would step down by
the end of the year. He did not say what French candidate would take
his spot.
German Chancellor Angela Merkel, meanwhile, rejected the claim that
pressure applied on Bini Smaghi to resign his post by the Italian
government had endangered the independence of the ECB.
"I believe that the independence of the European Central Bank, as
regards its ability to perform its tasks, has been preserved
entirely," she told reporters.
The European Parliament and the ECB board had already given their
approve to Draghi's appointment.
Delaying his appointment until their next summit in September would
have underlined divisions among EU leaders, who have already
struggled to find a common line on debt-stricken Greece and the best
way of containing the financial crisis that has also pushed Ireland
and Portugal into needing massive bailouts.
The ECB has played a central role during the debt crisis that has
afflicted the 17-country eurozone over the past 18 months or so. For
example, Trichet overrode criticism from some of the more hawkish
officials at the bank when he backed a multibillion euro (dollar)
bond-buying program intended to ease the pressure on the more
indebted countries. More recently, the ECB has found itself in the difficult position of
raising interest rates to keep a lid on above-target inflation
levels even though the weaker eurozone economies are still
struggling.
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 The 63-year-old Draghi will start his eight-year term at the ECB on
Nov. 1. The former managing director at U.S. investment bank Goldman
Sachs also runs the Financial Stability Board, an international
organization that seeks to head off risks for the global financial
system.
The decision on Draghi came a day after EU leaders gave their
clearest sign yet that Greece will get a second bailout in the
coming weeks, on top of last year's euro110 billion ($156 billion).
"We agreed that there will be a new program for Greece," said German
Chancellor Angela Merkel.
The stronger language on aid for Greece was also made possible after
debt inspectors from the EU and the International Monetary Fund
reached a final deal Thursday with the government in Athens on
euro28 billion worth of new austerity measures.
The measures have to be passed by the Greek Parliament next week for
the bailout funds to be released. If lawmakers fail to back the
package, then Greece will likely be staring at a default on its
debts.
Even if it gets a second bailout, many economists think that Greece
will have to restructure its debts in some shape or form in the
coming years, especially if the economy shrinks further.
[Associated
Press; By GABRIELE STEINHAUSER]
David McHugh in Frankfurt and Angela
Charlton contributed to this story.
Copyright 2011 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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