Juncker reappointed to eurozone post

Posted on July 10, 2012

Jean-Claude Juncker, Luxembourg’s prime minister, won another term as president of the eurozone group of finance ministers as compatriot and inflation hawk, Yves Mersch, claimed the vacant seat on the European Central Bank’s six-member executive board.

The appointments were announced following a meeting of eurozone finance ministers in Brussels in which the group also asked Germany’s Klaus Regling, the managing director of the eurozone’s temporary bailout fund, to lead its successor, the €500bn European Stability Mechanism, when it comes on line later this year.

    Mr Juncker has been at the forefront of the eurozone’s efforts to confront the sovereign debt crisis for nearly three years. He accepted another two-and-a-half-year term but told reporters that he would depart early – possibly before the end of the year.

    Meanwhile, Mr Mersch, head of the Luxembourg Central Bank, succeeded after battling for months with Antonio Sainz de Vicuna, the Spanish nominee.

    His triumph – as well as the departure of José Manuel González-Páramo – means Spain has effectively lost its seat on the board at a time when the ECB is poised to play an influential role in overhauling the country’s ailing banks.

    Mr Mersch is known for his tough stance on inflation as well as his long experience on the ECB’s wider governing council. He was supported by a group of fiscally-prudent northern member states, who have underwritten the biggest share of the bloc’s bailouts, and ganged up to thwart Mr de Vicuna’s bid.

    Mr Juncker vouched for the central banker’s independence, quipping: “Very often, I was a victim of his independence.”

    He also noted that Mr Regling’s appointment would allow for a “seamless transition” when the ESM comes into force. Wolfgang Schäuble, the German finance minister, had been considered a strong contender to replace Mr Juncker, who has presided over the eurogroup since the post was created in 2005.

    Yet Mr Schäuble’s candidacy met resistance from some of the eurozone’s peripheral economies, who feared that the eurozone presidency would give a dominant Germany even more power to determine the bloc’s policies.

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