In Eye of Euro Storm, Jean-Claude Trichet at the Helm of ECB (8/9)     Print

The president of the European Central Bank, Jean-Claude Trichet, has devoted the last three decades of his distinguished career to building a solid currency for Europe. Now, three months from his retirement, Trichet, 68, is waging what seems to be the fiercest struggle of all as he strives to prevent a collapse of his prized euro.

Here are two good accounts of the man and his current actions: one from the New York Times and one from Bloomberg.

The debt threat to the single currency will not be over when he steps down, to be succeeded by Italian central banker Mario Draghi. And Draghi himself seems bound to face an initial credibility challenge since neither he nor anyone else can bring the same credentials and conviction to the post as those demonstrated by Trichet in his years as France’s monetary czar, an architect of the euro and the man who has established the ECB as its guardian.

But if the euro survives its current turmoil, it will be largely due to the exceptional initiative and authority wielded by Trichet in what has often been a power vacuum of political leadership from EU heads of state in trying to grapple with the recurrent debt issue.

The result has been to force him into taking on responsibilities for the ECB – notably in buying up bonds of countries under market assault such as Greece, Ireland and Portugal and now Spain and Italy – to keep their governments solvent. It has taken him and the bank into territory he would have wanted to leave to EU governments and their leaders. But his hand had been forced by paralyzing gaps in EU views. Put at its simplest, German Chancellor Angela Merkel refuses to sign up for the creation of a “Eurobond” that would guarantee all euro debts while poor EU nations remain unready to sign away sovereign authority over their spending.

So Trichet has had to use his personal authority and the ECB’s credit to try bridging the gap. His performance has garnered some criticism over the last three years of policy-making amid turmoil, but generally speaking he has a strong claim to being the most influential public official in Europe.

 

        -- By European Affairs