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Business

The Money Maker Goes

The President of the European Central Bank, Wim Duisenberg, says he will cut short his tenure and step down in July 2003. The Dutchman will most likely be replaced by a French national.

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The man who helped launch the euro will step down next year

Wim Duisenberg announced on Thursday that he would resign as head of the European Central Bank (ECB) on July 9th of next year. His term at the helm of the Frankfurt-based institution would have expired in 2006.

Duisenberg's announcement didn't come totally out of the blue. It is widely believed that Duisenberg would have liked to stay on, but was forced to cut his term short due to a secret deal struck by European Union governments.

Even before he took office in 1998, Duisenberg, 66, had declared that he would not serve his full term because of age. But until Thursday, he had never made any definite statements about the timing of his premature resignation.

When will he go?

Speculation about the definite date had been rampant all along. Any time Duisenberg touched upon the issue, financial analysts would analyze and interpret his words.

In October of last year, Duisenberg indicated that he felt no urge to retire any time soon. "I won't step down in the near future," he said. "I like what I'm doing."

When at the end of December journalists asked him whether he planned to stay in office until the end of 2002, he answered with an enthusiastic "Oh yes!"

Analysts at the time said Duisenberg's comment was important because it showed the ECB would exert its freedom from political control.

On Thursday, however, Duisenberg finally named the definite date for his upcoming resignation: he will leave his post at the ECB on his 68th birthday - July 9, 2003.

Horse-trading or "Gentleman's agreement"?

There is already speculation about his potential successor.

France would like to see Jean-Claude Trichet, the Governor of the Bank of France, as Duisenberg's successor at the head of the ECB. But a shadow has fallen on Trichet because of a domestic judicial inquiry involving the Credit Lyonnais bank.

France has been pushing its candidate for the top ECB post ever since the institution was formed.

But when European Union leaders voted in 1998 on who would be the first to head the ECB, France stood alone. All other European Union countries backed Duisenberg, the veteran head of the Dutch central bank.

In what's been called a "rotten compromise", the EU leaders forced Duisenberg to declare that he would step down before the end of his term and make way for a successor before 2006.

And the EU heads of government promised France that a Frenchman would replace Duisenberg.

Behind the scenes deal

There was no official confirmation for such a gentleman's agreement. But Thomas Mayer, chief European economist at Goldman Sachs told Reuters that the announcement Duisenberg made on Thursday "confirms that there was an agreement about the length of his presidency."

"This is regrettable because it throws a shadow on the ECB and its independence," Mayer continues.

Duisenberg's announcement about his upcoming retirement came on the 10th anniversary of the signing of the Maastricht treaty. The historic treaty was the cornerstone for the single European currency.

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