The president of the European Central Bank (ECB), Mr Wim Duisenberg, has ended months of speculation by declaring he will resign next year. Mr Duisenberg will leave office on July 9th, 2003, his 68th birthday and three years before his term ends.
The favourite to succeed him is Mr Jean Claude Trichet, the governor of France's central bank. But Mr Trichet's candidature could be derailed by an investigation into his alleged role in a scandal surrounding Crédit Lyonnais bank.
Mr Duisenberg, who made his announcement after a meeting of the ECB's governing council in Maastricht, said his decision to resign was entirely for personal reasons. He said he was announcing his date of departure early to end uncertainty about his intentions.
"I was worried about growing speculation in markets and media about the date of my departure. The wave of uncertainty around the ECB and the euro was detrimental to the image of the ECB and the euro," he said.
The ECB meeting, which left interest rates unchanged at 3.25 per cent, took place in the room where the treaty establishing Economic and Monetary Union was signed exactly 10 years ago.
Mr Duisenberg said the ECB's monetary stance remained appropriate for the euro-zone's economic conditions. He said all available information pointed to a recovery starting halfway through this year.
Asked about the European Commission's recommendation that Germany and Portugal should receive an "early warning" over their budget deficits, Mr Duisenberg hinted that the warning could be watered down by EU finance ministers next week.
"We are not talking in terms of a compromise but, if there is a way to extract certain definitive and well-defined commitments from the governments concerned, that might replace the early warning. And then the early warning will have fulfilled its function," he said.
Germany has been urging EU finance ministers to step back from issuing a warning when they meet in Brussels next week. But the Economic Affairs Commissioner, Mr Pedro Solbes, insisted yesterday that the warning was justified under the terms of the Stability and Growth Pact.
"In the case of Germany and Portugal, the facts are as clear as the process which is to be used in these cases," he wrote in a German newspaper.
The financial markets reacted calmly to the announcement of Mr Duisenberg's intention to resign and to the decision to leave interest rates unchanged.
