European Union finance ministers have nominated the Greek central banker, Mr Lucas Papademos to succeed Mr Christian Noyer as vice-president of the European Central Bank (ECB).
But they failed to agree unanimously on the appointment and Belgium signalled that it could block the appointment of France's Mr Jean-Claude Trichet as ECB President next year unless a Benelux candidate wins a position on the Bank's executive board.
Belgium's finance minister, Mr Didier Reynders, abstained during Saturday's vote in the Spanish city of Oviedo after it became clear that the Belgian candidate for ECB vice-president, Dr Paul De Grauwe, had no chance of success. Mr Papademos' nomination must be approved by EU foreign ministers in Luxembourg today and by the European Parliament later this month before EU leaders confirm his appointment when they meet in Seville in June.
Belgium is expected to drop its opposition to the appointment today but Mr Reynders dropped a broad hint on Saturday night that he would try to stop Mr Trichet succeeding Mr Wim Duisenberg unless a Benelux national won a position on the ECB's executive board next year.
Speaking to Belgian journalists, Mr Reynders referred to a deal agreed in 1998 that promised France that its candidate would become ECB President before the end of Mr Duisenberg's full term in office.
"I do not deny that there is an agreement between Chirac and Duisenberg. I do deny that it is binding on the Belgian government," Mr Reynders said.
Ms Sirkka Hamalainen, a Finnish member of the ECB's executive board, is due to step down in May 2003, around the same time that Mr Duisenberg has said he will leave his post. Mr Reynders' remarks suggest that Belgium will attempt to make Mr Trichet's appointment conditional on its candidate succeeding Ms Hamalainen.
"There is no demand from Belgium for us to agree on the name of a candidate or the name of a country, but there is a demand that we take account of the place of Benelux in new decisions on the bank's executive committee," Mr Reynders said.
The decision to nominate Mr Papademos came after hours of discussion among the ministers over whether they could declare a consensus without Belgium's support.
In the end, they said that there was "consensus with the abstention of Belgium".
Mr Papademos said he was "pleased and honoured" to have been chosen as the next ECB vice-president and Mr Duisenberg expressed satisfaction at the ministers' decision.
"I am very happy that we have a timely proposal for the succession of Noyer," he said.
During their weekend meeting, the ministers agreed to consider toughening rules on financial analysts, markets and corporate governance in the hope of preventing an Enron-style corporate scandal in Europe.
They asked legal experts to draw up proposals for greater transparency, tougher surveillance of companies and auditing practices and asked market regulators to report on risks posed by trading in derivatives and hedge funds.
They asked senior officials to examine two rival proposals for reforming banking supervision in Europe, one by the ECB and the other backed by Germany and Britain.
The Anglo-German proposal wants to keep supervision in the hands of national governments and independent regulators and to prevent the ECB from becoming involved.
