Berluconi asks Bini-Smaghi to resign

Eurointelligence’s superb daily edition (has been made paid version now) has this superb story:

As we know Mario Draghi is slated to be the next chief of ECB. Here is his statement to European Parliament expressing why he is a suitable caanidiate for the position.

This would imply two Italians on ECB executive Board – Draghi and Bini Smaghi. This is a strict no-no:

It is going to be interesting how they are going to resolve the dilemma of the two Italians in the ECB. The French have said they would not support Mario Draghi unless Lorenzo Bini-Smaghi were to step down. Silvio Berlusconi yesterday had a meeting with Bini-Smaghi, after which he released a statement requesting Bini-Smaghi’s resignation from the board of the ECB “while fully respecting the independence of the European Central Bank”. When Bini-Smaghi left Palazzo Chigi he had no comment. Corriere della Sera has all the details.

As per Corriere della Sera, may by Bini Smaghi is given the chief of the Central Bank role as part of the exchange.

There is some secret arrangement amidst EMU officials that all 6 people should be of different countries in its board.

I was just looking at the changes in ECB board so far (better picture is here). The story is consistent that only one member from one country. Having a German and a French is mandatory in the board and  rest of the fifteen keep rotating around them.

First Board     Tenure Years Tenure Period
Wim Duisenberg President Netherlands 1998-02 5 years
Christian Noyer Vice President France 1998-01 4 years
Sirkka Hämäläinen Member Finalnd 1998-02 5 years
Eugenio Domingo Solans Member Spain 1998-03 6 years
Tommaso Padoa-Schioppa Member Italy 1998-04 7 years
Otmar Issing Member Germany 1998-05 8 years
         
         
Jean Claude Trichet President France 2003-11 8 years
Lucas Papademos Vice President Greece 2002-10 8 years
Gertrude Tumpel-Gugerell Member Austria 2003-11 8 years
José Manuel González Paramo Member Spain 2004-11 8 years
Lorenzo Bini Smaghi Member Italy 2005-12 8 years
Jürgen Stark Member Germany 2006-13 8 years
         
Vitor Constâncio  Vice President Portugal 2010-18 8 years
Peter Praet Member Belgium 2011-19 8 years

Though this arrangement is tragic. Ideally best people should be picked to head the central bank but in Euroarea regionality matters a great deal. So round of musical chairs goes on and on around Germany and France…

What is most likely to happen is instead of Bini Smaghi, another French member might come. They already have a German as Jurgen Stark. Similar issues were raised when Weber was seen as the major candicate for ECB chief position. As Weber was from Germany, Stark would have to resign…

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One Response to “Berluconi asks Bini-Smaghi to resign”

  1. Dipesh Says:

    http://www.businessinsider.com/meaningless-phrases-that-sound-smart-on-cnbc-2011-6?op=1

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