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Jean-Claude Trichet (17): The French government's 11th-hour ECB candidate

The European Central Bank was established in June 1998, seven months before the euro's debut as the Continent's single currency. I found myself thrust to the fore as a candidate to become the first ECB president. I thus became a focus of a fierce debate over who should lead the institution. 

     In 1996, Wim Duisenberg, governor of the central bank of the Netherlands, was appointed president of the European Monetary Institution -- the transitional authority before the formal launch of the ECB. A man of experience and reason, Wim was an extremely friendly fellow. He was also dedicated to sound economic and monetary policies. My personal view at the time was that, since Wim had been named head of the EMI with the support of all countries, it was natural that he would assume the ECB presidency.

     Yet France's cohabitation government, led by socialist Prime Minister Lionel Jospin and conservative President Jacques Chirac, decided that the country should put forth its own candidate -- me. In November 1997, I was called to Prime Minister Jospin's official residence. "My government, in full accord with the president of the republic, would like you to be president of the ECB," he told me. I received a phone call from President Chirac confirming this.

     I was perplexed. This was totally unexpected, not least because of the bad relationship I had with the president, not to mention my tough discussions with the previous socialist government. On the other hand, I was deeply pleased that, at such a crucial moment, both the left and right had confidence in me. My wife, who had often overheard me arguing with President Chirac on the phone, was delighted that both sides had agreed on my candidacy. It was a kind of ex-post recognition of the Banque de France's monetary policy, which had been heavily criticized by politicians.

     My feelings were also mixed because I respected Wim deeply, and everyone recognized him to be the prime candidate. He must have been astounded when he learned of France's position. In fact, all the other governments, as well as my central bank colleagues, were stunned that the French government would make such a move so late in the game. My close friend Hans Tietmeyer, governor of the Bundesbank, felt that it would be a mistake for Europe's leaders to agree to France's proposal.

     I could not say "no" -- not when both the left and right in my country wanted me to run -- but I totally separated myself from the European leaders' deliberations. On May 2-4, 1998, just before the ECB's launch, European Union heads of state met in Brussels and agonized over who would lead the central bank. I tried to mentally prepare myself for whatever they might decide.

Clearing my name

The leaders decided to appoint Duisenberg as the first head of the ECB after all. President Chirac, at his office in Brussels, informed me that I would be the bank's second president.

     Wim had already publicly indicated, long before all these developments, that he would accept the position of ECB president but would not serve the full eight-year term because of his age. Once in office, he was naturally free to retire, or to decide not to retire, whenever he wished. Yet I kept him waiting as I dealt with my own circumstances.

Left to right: Wim Duisenberg, myself and Hans Tietmeyer in Versailles in 1995

     I, as director of the Treasury, had been named as a defendant in a trial alongside Jacques de Larosiere, my most respected predecessor as governor of the Banque de France, and my dear deputy in the Treasury, Jean-Pascal Beaufret. The case concerned supposed irregularities at the former state bank Credit Lyonnais. We were suspected of involvement in wrongdoing and the spread of false information. The court proceedings lasted eight years, from 1995 to 2003.

     At times, the Banque de France faced bitter opposition from the government over monetary policy. And France could be a place where some used all available weapons to weaken their perceived opponents. I had no doubt that the trial was part of that wretched fight.

     I insisted that my colleagues and I had made every effort -- often against the complacency of the government itself -- to ensure that Credit Lyonnais was operated in the best possible fashion. It was through our initiative to conduct a full audit that the bank's sloppy management was brought to light.

     During the final five weeks of the trial, I appeared in court daily, answering questions whenever necessary. Though my entire professional life was at stake, I felt surprisingly detached. On June 18, 2003, the three of us were found not guilty. This cleared the way for me to quickly take the helm of the ECB in Frankfurt.

     Though we did not talk directly, Wim was such a sensible person that he understood everything, and stayed on as ECB president until the verdict was reached. I am extremely grateful to him.

Jean-Claude Trichet is former president of the European Central Bank.

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